Correlation Between The Hartford and Mondrian Emerging

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

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

Diversification Opportunities for The Hartford and Mondrian Emerging

0.55

Correlation Coefficient

The Hartford  Mondrian Emerging

Very weak diversification

The 3 months correlation between THE and Mondrian is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Emerging and Mondrian Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondrian Emerging Markets and The Hartford 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 The Hartford Emerging are associated (or correlated) with Mondrian Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondrian Emerging Markets has no effect on the direction of The Hartford i.e., The Hartford and Mondrian Emerging go up and down completely randomly.

Pair Corralation between The Hartford and Mondrian Emerging

Assuming the 90 days horizon The Hartford Emerging is expected to under-perform the Mondrian Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Hartford Emerging is 2.29 times less risky than Mondrian Emerging. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Mondrian Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  776.00  in Mondrian Emerging Markets on September 4, 2024 and sell it today you would earn a total of  10.00  from holding Mondrian Emerging Markets or generate 1.29% return on investment over 90 days.

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

The Hartford Emerging  vs.  Mondrian Emerging Markets

Hartford Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mondrian Emerging Markets

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mondrian Emerging Markets are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Mondrian Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Hartford and Mondrian Emerging

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

The idea behind The Hartford Emerging and Mondrian Emerging Markets 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.