Correlation Between Gmo Emerging and Hartford Moderate

Can any of the company-specific risk be diversified away by investing in both Gmo Emerging and Hartford Moderate 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 Gmo Emerging and Hartford Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gmo Emerging Country and Hartford Moderate Allocation, you can compare the effects of market volatilities on Gmo Emerging and Hartford Moderate 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 Gmo Emerging with a short position of Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo Emerging and Hartford Moderate.

Diversification Opportunities for Gmo Emerging and Hartford Moderate

0.83

Correlation Coefficient

Gmo Emerging  Hartford Moderate

Very poor diversification

The 3 months correlation between Gmo and Hartford is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Gmo Emerging Country and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate and Gmo Emerging 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 Gmo Emerging Country are associated (or correlated) with Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Gmo Emerging i.e., Gmo Emerging and Hartford Moderate go up and down completely randomly.

Pair Corralation between Gmo Emerging and Hartford Moderate

Assuming the 90 days horizon Gmo Emerging is expected to generate 1.38 times less return on investment than Hartford Moderate. But when comparing it to its historical volatility, Gmo Emerging Country is 1.6 times less risky than Hartford Moderate. It trades about 0.17 of its potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,296  in Hartford Moderate Allocation on September 2, 2024 and sell it today you would earn a total of  52.00  from holding Hartford Moderate Allocation or generate 4.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Gmo Emerging Country  vs.  Hartford Moderate Allocation

Gmo Emerging Country

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Emerging Country are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Moderate

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Moderate Allocation are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hartford Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gmo Emerging and Hartford Moderate

The main advantage of trading using opposite Gmo Emerging and Hartford Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo Emerging position performs unexpectedly, Hartford Moderate 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 Moderate will offset losses from the drop in Hartford Moderate's long position.

The idea behind Gmo Emerging Country and Hartford Moderate Allocation 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.

Check out your portfolio center.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.