Correlation Between Boeing and Hartford Multifactor

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

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

Diversification Opportunities for Boeing and Hartford Multifactor

-0.27

Correlation Coefficient

Boeing  Hartford Multifactor

Very good diversification

The 3 months correlation between Boeing and Hartford is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Hartford Multifactor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Boeing 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 Boeing 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 Boeing i.e., Boeing and Hartford Multifactor go up and down completely randomly.

Pair Corralation between Boeing and Hartford Multifactor

Allowing for the 90-day total investment horizon The Boeing is expected to generate 2.96 times more return on investment than Hartford Multifactor. However, Boeing is 2.96 times more volatile than Hartford Multifactor Equity. It trades about 0.06 of its potential returns per unit of risk. Hartford Multifactor Equity is currently generating about 0.13 per unit of risk. If you would invest  15,677  in The Boeing on September 13, 2024 and sell it today you would earn a total of  919.00  from holding The Boeing or generate 5.86% return on investment over 90 days.

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

The Boeing  vs.  Hartford Multifactor Equity

Boeing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Boeing are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hartford Multifactor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Equity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hartford Multifactor is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Boeing and Hartford Multifactor

The main advantage of trading using opposite Boeing and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing 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 The Boeing and Hartford Multifactor Equity 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.