Correlation Between SPDR MSCI and Hartford Multifactor

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

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

Diversification Opportunities for SPDR MSCI and Hartford Multifactor

0.84

Correlation Coefficient

SPDR MSCI  Hartford Multifactor

Very poor diversification

The 3 months correlation between SPDR and Hartford is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MSCI Emerging and Hartford Multifactor Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and SPDR MSCI 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 SPDR MSCI Emerging 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 SPDR MSCI i.e., SPDR MSCI and Hartford Multifactor go up and down completely randomly.

Pair Corralation between SPDR MSCI and Hartford Multifactor

Given the investment horizon of 90 days SPDR MSCI is expected to generate 1.31 times less return on investment than Hartford Multifactor. In addition to that, SPDR MSCI is 1.01 times more volatile than Hartford Multifactor Emerging. It trades about 0.05 of its total potential returns per unit of risk. Hartford Multifactor Emerging is currently generating about 0.07 per unit of volatility. If you would invest  2,286  in Hartford Multifactor Emerging on December 28, 2024 and sell it today you would earn a total of  71.75  from holding Hartford Multifactor Emerging or generate 3.14% return on investment over 90 days.

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

SPDR MSCI Emerging  vs.  Hartford Multifactor Emerging

SPDR MSCI Emerging

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI Emerging are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, SPDR MSCI is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Hartford Multifactor

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Emerging are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hartford Multifactor is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SPDR MSCI and Hartford Multifactor

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

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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.