Correlation Between Vanguard International and Hartford Multifactor

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

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

Diversification Opportunities for Vanguard International and Hartford Multifactor

0.89

Correlation Coefficient

Vanguard International  Hartford Multifactor

Very poor diversification

The 3 months correlation between Vanguard and Hartford is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International High and Hartford Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Vanguard International 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 Vanguard International High 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 Vanguard International i.e., Vanguard International and Hartford Multifactor go up and down completely randomly.

Pair Corralation between Vanguard International and Hartford Multifactor

Given the investment horizon of 90 days Vanguard International High is expected to under-perform the Hartford Multifactor. In addition to that, Vanguard International is 1.26 times more volatile than Hartford Multifactor Developed. It trades about -0.01 of its total potential returns per unit of risk. Hartford Multifactor Developed is currently generating about 0.01 per unit of volatility. If you would invest  2,985  in Hartford Multifactor Developed on September 2, 2024 and sell it today you would earn a total of  9.00  from holding Hartford Multifactor Developed or generate 0.3% return on investment over 90 days.

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

Vanguard International High  vs.  Hartford Multifactor Developed

Vanguard International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vanguard International High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, Vanguard International is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Hartford Multifactor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Multifactor Developed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Hartford Multifactor is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vanguard International and Hartford Multifactor

The main advantage of trading using opposite Vanguard International and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International 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 Vanguard International High and Hartford Multifactor Developed 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..