Correlation Between Invesco Developing and The Hartford

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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

InvescoTheDiversified AwayInvescoTheDiversified Away100%
0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Invesco and The is 0.49. 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 Markets is expected to generate 0.61 times more return on investment than The Hartford. However, Invesco Developing Markets is 1.63 times less risky than The Hartford. It trades about -0.21 of its potential returns per unit of risk. The Hartford Equity is currently generating about -0.17 per unit of risk. If you would invest  3,466  in Invesco Developing Markets on October 16, 2024 and sell it today you would lose (307.00) from holding Invesco Developing Markets or give up 8.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Invesco Developing Markets  vs.  The Hartford Equity

 Performance 
JavaScript chart by amCharts 3.21.15NovDec -10-505
JavaScript chart by amCharts 3.21.15GTDYX HQISX
       Timeline  
Invesco Developing 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Invesco Developing Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan31.53232.53333.53434.535
Hartford Equity 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Hartford Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2020.52121.52222.523

Invesco Developing and The Hartford Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.3-0.99-0.68-0.37-0.08060.06360.320.630.941.25 0.10.20.30.40.50.60.7
JavaScript chart by amCharts 3.21.15GTDYX HQISX
       Returns  

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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