Correlation Between Hartford Multifactor and SPDR MSCI

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

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

Diversification Opportunities for Hartford Multifactor and SPDR MSCI

0.98

Correlation Coefficient

Hartford Multifactor  SPDR MSCI

Almost no diversification

The 3 months correlation between Hartford and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Multifactor Equity and SPDR MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR MSCI USA 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 Equity are associated (or correlated) with SPDR MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR MSCI USA has no effect on the direction of Hartford Multifactor i.e., Hartford Multifactor and SPDR MSCI go up and down completely randomly.

Pair Corralation between Hartford Multifactor and SPDR MSCI

Given the investment horizon of 90 days Hartford Multifactor Equity is expected to under-perform the SPDR MSCI. In addition to that, Hartford Multifactor is 1.11 times more volatile than SPDR MSCI USA. It trades about -0.29 of its total potential returns per unit of risk. SPDR MSCI USA is currently generating about -0.26 per unit of volatility. If you would invest  16,191  in SPDR MSCI USA on October 6, 2024 and sell it today you would lose (611.00) from holding SPDR MSCI USA or give up 3.77% 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 Equity  vs.  SPDR MSCI USA

Hartford Multifactor

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Multifactor Equity are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

SPDR MSCI USA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR MSCI USA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, SPDR MSCI is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hartford Multifactor and SPDR MSCI

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

The idea behind Hartford Multifactor Equity and SPDR MSCI USA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.