Correlation Between Zacks Small-cap and Hartford Schroders

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

By analyzing existing cross correlation between Zacks Small Cap E and Hartford Schroders Small, you can compare the effects of market volatilities on Zacks Small-cap and Hartford Schroders 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 Zacks Small-cap with a short position of Hartford Schroders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zacks Small-cap and Hartford Schroders.

Diversification Opportunities for Zacks Small-cap and Hartford Schroders

0.99

Correlation Coefficient

Zacks Small-cap  Hartford Schroders

No risk reduction

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

Pair Corralation between Zacks Small-cap and Hartford Schroders

Assuming the 90 days horizon Zacks Small Cap E is expected to under-perform the Hartford Schroders. In addition to that, Zacks Small-cap is 1.06 times more volatile than Hartford Schroders Small. It trades about -0.09 of its total potential returns per unit of risk. Hartford Schroders Small is currently generating about -0.08 per unit of volatility. If you would invest  2,906  in Hartford Schroders Small on December 20, 2024 and sell it today you would lose (161.00) from holding Hartford Schroders Small or give up 5.54% of portfolio value over 90 days.

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

Zacks Small Cap E  vs.  Hartford Schroders Small

Zacks Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zacks Small Cap E has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hartford Schroders Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Schroders Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hartford Schroders is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zacks Small-cap and Hartford Schroders

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

The idea behind Zacks Small Cap E and Hartford Schroders Small 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.