Correlation Between First Trust and Hartford Multifactor
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Hartford Multifactor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust RiverFront and Hartford Multifactor Developed, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Hartford Multifactor.
Diversification Opportunities for First Trust and Hartford Multifactor
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between First and Hartford is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding First Trust RiverFront and Hartford Multifactor Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and First Trust 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 First Trust RiverFront 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 First Trust i.e., First Trust and Hartford Multifactor go up and down completely randomly.
Pair Corralation between First Trust and Hartford Multifactor
Given the investment horizon of 90 days First Trust RiverFront is expected to generate 1.12 times more return on investment than Hartford Multifactor. However, First Trust is 1.12 times more volatile than Hartford Multifactor Developed. It trades about -0.26 of its potential returns per unit of risk. Hartford Multifactor Developed is currently generating about -0.33 per unit of risk. If you would invest 6,386 in First Trust RiverFront on January 21, 2024 and sell it today you would lose (219.00) from holding First Trust RiverFront or give up 3.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
First Trust RiverFront vs. Hartford Multifactor Developed
Performance |
| Timeline |
| First Trust RiverFront |
| Hartford Multifactor |
First Trust and Hartford Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Hartford Multifactor
The main advantage of trading using opposite First Trust and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. iShares ESG Advanced | First Trust vs. iShares ESG Advanced | First Trust vs. iShares ESG MSCI | First Trust vs. iShares ESG Aware |
| Hartford Multifactor vs. Invesco FTSE RAFI | Hartford Multifactor vs. Invesco FTSE RAFI | Hartford Multifactor vs. Invesco FTSE RAFI | Hartford Multifactor vs. Invesco FTSE RAFI |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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