Correlation Between Invesco International and Hartford Multifactor

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

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

Diversification Opportunities for Invesco International and Hartford Multifactor

0.88

Correlation Coefficient

Invesco International  Hartford Multifactor

Very poor diversification

The 3 months correlation between Invesco and Hartford is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Invesco International Dividend and Hartford Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Invesco 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 Invesco International Dividend are associated (or correlated) with Hartford Multifactor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Multifactor has no effect on the direction of Invesco International i.e., Invesco International and Hartford Multifactor go up and down completely randomly.

Pair Corralation between Invesco International and Hartford Multifactor

Considering the 90-day investment horizon Invesco International is expected to generate 1.8 times less return on investment than Hartford Multifactor. But when comparing it to its historical volatility, Invesco International Dividend is 1.07 times less risky than Hartford Multifactor. It trades about 0.13 of its potential returns per unit of risk. Hartford Multifactor Developed is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,841  in Hartford Multifactor Developed on December 29, 2024 and sell it today you would earn a total of  285.00  from holding Hartford Multifactor Developed or generate 10.03% return on investment over 90 days.

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

Invesco International Dividend  vs.  Hartford Multifactor Developed

Invesco International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Invesco International Dividend are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Invesco International is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Hartford Multifactor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Developed are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Hartford Multifactor may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Invesco International and Hartford Multifactor

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

The idea behind Invesco International Dividend and Hartford Multifactor Developed 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.