Correlation Between American Century and Hartford Multifactor

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

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

Diversification Opportunities for American Century and Hartford Multifactor

0.98

Correlation Coefficient

American Century  Hartford Multifactor

Almost no diversification

The 3 months correlation between American and Hartford is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Century STOXX and Hartford Multifactor Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and American Century 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 American Century STOXX 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 American Century i.e., American Century and Hartford Multifactor go up and down completely randomly.

Pair Corralation between American Century and Hartford Multifactor

Given the investment horizon of 90 days American Century STOXX is expected to generate 0.88 times more return on investment than Hartford Multifactor. However, American Century STOXX is 1.14 times less risky than Hartford Multifactor. It trades about -0.31 of its potential returns per unit of risk. Hartford Multifactor Equity is currently generating about -0.29 per unit of risk. If you would invest  6,403  in American Century STOXX on October 6, 2024 and sell it today you would lose (276.00) from holding American Century STOXX or give up 4.31% of portfolio value over 90 days.

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

American Century STOXX  vs.  Hartford Multifactor Equity

American Century STOXX

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Century STOXX are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, American Century is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with American Century and Hartford Multifactor

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

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.