Correlation Between Hartford Multifactor and Two Roads

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

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

Diversification Opportunities for Hartford Multifactor and Two Roads

0.99

Correlation Coefficient

Hartford Multifactor  Two Roads

No risk reduction

The 3 months correlation between Hartford and Two is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Multifactor Small and Two Roads Shared in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Two Roads Shared and Hartford Multifactor 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 Hartford Multifactor Small are associated (or correlated) with Two Roads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Two Roads Shared has no effect on the direction of Hartford Multifactor i.e., Hartford Multifactor and Two Roads go up and down completely randomly.

Pair Corralation between Hartford Multifactor and Two Roads

Given the investment horizon of 90 days Hartford Multifactor Small is expected to under-perform the Two Roads. But the etf apears to be less risky and, when comparing its historical volatility, Hartford Multifactor Small is 1.09 times less risky than Two Roads. The etf trades about -0.28 of its potential returns per unit of risk. The Two Roads Shared is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  3,586  in Two Roads Shared on October 8, 2024 and sell it today you would lose (185.00) from holding Two Roads Shared or give up 5.16% of portfolio value over 90 days.

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

Hartford Multifactor Small  vs.  Two Roads Shared

Hartford Multifactor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Small are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hartford Multifactor is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Two Roads Shared

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Two Roads Shared are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Two Roads is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hartford Multifactor and Two Roads

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

The idea behind Hartford Multifactor Small and Two Roads Shared 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .