Correlation Between RiverFront Dynamic and Hartford Multifactor

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

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

Diversification Opportunities for RiverFront Dynamic and Hartford Multifactor

0.69

Correlation Coefficient

RiverFront Dynamic  Hartford Multifactor

Poor diversification

The 3 months correlation between RiverFront and Hartford is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding RiverFront Dynamic Core and Hartford Multifactor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and RiverFront Dynamic 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 RiverFront Dynamic Core 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 RiverFront Dynamic i.e., RiverFront Dynamic and Hartford Multifactor go up and down completely randomly.

Pair Corralation between RiverFront Dynamic and Hartford Multifactor

Given the investment horizon of 90 days RiverFront Dynamic Core is expected to generate 0.41 times more return on investment than Hartford Multifactor. However, RiverFront Dynamic Core is 2.44 times less risky than Hartford Multifactor. It trades about 0.08 of its potential returns per unit of risk. Hartford Multifactor Equity is currently generating about -0.04 per unit of risk. If you would invest  2,235  in RiverFront Dynamic Core on December 3, 2024 and sell it today you would earn a total of  30.50  from holding RiverFront Dynamic Core or generate 1.36% return on investment over 90 days.

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

RiverFront Dynamic Core  vs.  Hartford Multifactor Equity

RiverFront Dynamic Core

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RiverFront Dynamic Core are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, RiverFront Dynamic is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Hartford Multifactor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Multifactor Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hartford Multifactor is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with RiverFront Dynamic and Hartford Multifactor

The main advantage of trading using opposite RiverFront Dynamic and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RiverFront Dynamic 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 RiverFront Dynamic Core and Hartford Multifactor Equity 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.