Correlation Between Vanguard Small and Hartford Multifactor
Can any of the company-specific risk be diversified away by investing in both Vanguard Small 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 Small 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 Small Cap Index and Hartford Multifactor Small, you can compare the effects of market volatilities on Vanguard Small 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 Small with a short position of Hartford Multifactor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Hartford Multifactor.
Diversification Opportunities for Vanguard Small and Hartford Multifactor
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Hartford is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Hartford Multifactor Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Multifactor and Vanguard Small 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 Small Cap Index 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 Small i.e., Vanguard Small and Hartford Multifactor go up and down completely randomly.
Pair Corralation between Vanguard Small and Hartford Multifactor
Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to under-perform the Hartford Multifactor. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard Small Cap Index is 1.05 times less risky than Hartford Multifactor. The etf trades about -0.15 of its potential returns per unit of risk. The Hartford Multifactor Small is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 4,060 in Hartford Multifactor Small on January 25, 2024 and sell it today you would lose (62.00) from holding Hartford Multifactor Small or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Hartford Multifactor Small
Performance |
| Timeline |
| Vanguard Small Cap |
| Hartford Multifactor |
Vanguard Small and Hartford Multifactor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Hartford Multifactor
The main advantage of trading using opposite Vanguard Small and Hartford Multifactor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small 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.| Vanguard Small vs. OShares Quality Dividend | Vanguard Small vs. OShares Europe Quality | Vanguard Small vs. OShares Global Internet | Vanguard Small vs. ProShares SP MidCap |
| Hartford Multifactor vs. Vanguard Mid Cap Value | Hartford Multifactor vs. Vanguard Small Cap Growth | Hartford Multifactor vs. Vanguard Value Index | Hartford Multifactor vs. Vanguard Small Cap Index |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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