Correlation Between Disney and Hartford Multifactor

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

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

Diversification Opportunities for Disney and Hartford Multifactor

0.72

Correlation Coefficient

Disney  Hartford Multifactor

Poor diversification

The 3 months correlation between Disney and Hartford is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Walt Disney and Hartford Multifactor Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Disney 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 Walt Disney 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 Disney i.e., Disney and Hartford Multifactor go up and down completely randomly.

Pair Corralation between Disney and Hartford Multifactor

Considering the 90-day investment horizon Disney is expected to generate 1.17 times less return on investment than Hartford Multifactor. In addition to that, Disney is 1.41 times more volatile than Hartford Multifactor Small. It trades about 0.02 of its total potential returns per unit of risk. Hartford Multifactor Small is currently generating about 0.04 per unit of volatility. If you would invest  3,548  in Hartford Multifactor Small on October 10, 2024 and sell it today you would earn a total of  761.00  from holding Hartford Multifactor Small or generate 21.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Walt Disney  vs.  Hartford Multifactor Small

Walt Disney

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walt Disney are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward indicators, Disney unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hartford Multifactor

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Small are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hartford Multifactor is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Disney and Hartford Multifactor

The main advantage of trading using opposite Disney and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Disney 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 Walt Disney and Hartford Multifactor Small 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.