Correlation Between Dawson Geophysical and Hartford Multifactor

Can any of the company-specific risk be diversified away by investing in both Dawson Geophysical and Hartford Multifactor at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dawson Geophysical and Hartford Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dawson Geophysical and Hartford Multifactor International, you can compare the effects of market volatilities on Dawson Geophysical and Hartford Multifactor and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dawson Geophysical with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawson Geophysical and Hartford Multifactor.

Diversification Opportunities for Dawson Geophysical and Hartford Multifactor

0.26

Correlation Coefficient

Dawson Geophysical  Hartford Multifactor

Modest diversification

The 3 months correlation between Dawson and Hartford is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dawson Geophysical and Hartford Multifactor Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Dawson Geophysical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dawson Geophysical are associated (or correlated) with Hartford Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Multifactor has no effect on the direction of Dawson Geophysical i.e., Dawson Geophysical and Hartford Multifactor go up and down completely randomly.

Pair Corralation between Dawson Geophysical and Hartford Multifactor

Given the investment horizon of 90 days Dawson Geophysical is expected to generate 7.33 times more return on investment than Hartford Multifactor. However, Dawson Geophysical is 7.33 times more volatile than Hartford Multifactor International. It trades about 0.03 of its potential returns per unit of risk. Hartford Multifactor International is currently generating about -0.04 per unit of risk. If you would invest  150.00  in Dawson Geophysical on September 12, 2024 and sell it today you would earn a total of  3.00  from holding Dawson Geophysical or generate 2.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Dawson Geophysical  vs.  Hartford Multifactor Internati

Dawson Geophysical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dawson Geophysical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Dawson Geophysical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hartford Multifactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Multifactor International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Hartford Multifactor is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dawson Geophysical and Hartford Multifactor

The main advantage of trading using opposite Dawson Geophysical and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawson Geophysical position performs unexpectedly, Hartford Multifactor can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hartford Multifactor will offset losses from the drop in Hartford Multifactor's long position.

The idea behind Dawson Geophysical and Hartford Multifactor International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.