Correlation Between Hartford Global and Smallcap World

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

By analyzing existing cross correlation between Hartford Global Impact and Smallcap World Fund, you can compare the effects of market volatilities on Hartford Global and Smallcap World 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 Hartford Global with a short position of Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Global and Smallcap World.

Diversification Opportunities for Hartford Global and Smallcap World

0.73

Correlation Coefficient

Hartford Global  Smallcap World

Poor diversification

The 3 months correlation between Hartford and Smallcap is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Global Impact and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World and Hartford Global 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 Hartford Global Impact are associated (or correlated) with Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Hartford Global i.e., Hartford Global and Smallcap World go up and down completely randomly.

Pair Corralation between Hartford Global and Smallcap World

Assuming the 90 days horizon Hartford Global Impact is expected to generate 0.85 times more return on investment than Smallcap World. However, Hartford Global Impact is 1.18 times less risky than Smallcap World. It trades about 0.07 of its potential returns per unit of risk. Smallcap World Fund is currently generating about 0.03 per unit of risk. If you would invest  1,568  in Hartford Global Impact on October 24, 2024 and sell it today you would earn a total of  44.00  from holding Hartford Global Impact or generate 2.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Hartford Global Impact  vs.  Smallcap World Fund

Hartford Global Impact

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Global Impact are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Hartford Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smallcap World

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Hartford Global and Smallcap World

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

The idea behind Hartford Global Impact and Smallcap World Fund 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.