Correlation Between Mondrian Emerging and The Hartford

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

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

Diversification Opportunities for Mondrian Emerging and The Hartford

0.55

Correlation Coefficient

Mondrian Emerging  The Hartford

Very weak diversification

The 3 months correlation between Mondrian and THE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mondrian Emerging Markets and The Hartford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Emerging and Mondrian Emerging 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 Mondrian Emerging 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 Emerging has no effect on the direction of Mondrian Emerging i.e., Mondrian Emerging and The Hartford go up and down completely randomly.

Pair Corralation between Mondrian Emerging and The Hartford

Assuming the 90 days horizon Mondrian Emerging Markets is expected to generate 2.0 times more return on investment than The Hartford. However, Mondrian Emerging is 2.0 times more volatile than The Hartford Emerging. It trades about 0.04 of its potential returns per unit of risk. The Hartford Emerging is currently generating about 0.06 per unit of risk. If you would invest  661.00  in Mondrian Emerging Markets on September 4, 2024 and sell it today you would earn a total of  115.00  from holding Mondrian Emerging Markets or generate 17.4% return on investment over 90 days.

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

Mondrian Emerging Markets  vs.  The Hartford Emerging

Mondrian Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hartford Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic 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 Mondrian Emerging and The Hartford

The main advantage of trading using opposite Mondrian Emerging and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondrian Emerging 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 Mondrian Emerging Markets and The Hartford Emerging 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.