Correlation Between Federated International and Hartford Schroders

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

By analyzing existing cross correlation between Federated International Strategic and Hartford Schroders Smallmid, you can compare the effects of market volatilities on Federated International and Hartford Schroders 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 Federated International with a short position of Hartford Schroders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated International and Hartford Schroders.

Diversification Opportunities for Federated International and Hartford Schroders

-0.8

Correlation Coefficient

Federated International  Hartford Schroders

Pay attention - limited upside

The 3 months correlation between Federated and Hartford is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Federated International Strate and Hartford Schroders Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Schroders and Federated International 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 Federated International Strategic are associated (or correlated) with Hartford Schroders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Schroders has no effect on the direction of Federated International i.e., Federated International and Hartford Schroders go up and down completely randomly.

Pair Corralation between Federated International and Hartford Schroders

Assuming the 90 days horizon Federated International Strategic is expected to under-perform the Hartford Schroders. But the mutual fund apears to be less risky and, when comparing its historical volatility, Federated International Strategic is 1.33 times less risky than Hartford Schroders. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Hartford Schroders Smallmid is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,884  in Hartford Schroders Smallmid on September 5, 2024 and sell it today you would earn a total of  210.00  from holding Hartford Schroders Smallmid or generate 11.15% return on investment over 90 days.

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

Federated International Strate  vs.  Hartford Schroders Smallmid

Federated International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated International Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Federated International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Schroders

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Schroders Smallmid are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Schroders may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Federated International and Hartford Schroders

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

The idea behind Federated International Strategic and Hartford Schroders Smallmid 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.