Correlation Between Invesco Developing and The Hartford

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

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

Diversification Opportunities for Invesco Developing and The Hartford

0.45

Correlation Coefficient

Invesco Developing  The Hartford

Very weak diversification

The 3 months correlation between Invesco and The is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Developing Markets and The Hartford Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Equity and Invesco Developing 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 Invesco Developing Markets are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Equity has no effect on the direction of Invesco Developing i.e., Invesco Developing and The Hartford go up and down completely randomly.

Pair Corralation between Invesco Developing and The Hartford

Assuming the 90 days horizon Invesco Developing is expected to generate 1.6 times less return on investment than The Hartford. In addition to that, Invesco Developing is 1.36 times more volatile than The Hartford Equity. It trades about 0.05 of its total potential returns per unit of risk. The Hartford Equity is currently generating about 0.11 per unit of volatility. If you would invest  1,972  in The Hartford Equity on December 21, 2024 and sell it today you would earn a total of  82.00  from holding The Hartford Equity or generate 4.16% return on investment over 90 days.

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

Invesco Developing Markets  vs.  The Hartford Equity

Invesco Developing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco Developing Markets are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Invesco Developing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Invesco Developing and The Hartford

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

The idea behind Invesco Developing Markets and The Hartford 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.