Can any of the company-specific risk be diversified away by investing in both The Hartford and Blackrock Multi-asset 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 The Hartford and Blackrock Multi-asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Balanced and Blackrock Multi Asset Income, you can compare the effects of market volatilities on The Hartford and Blackrock Multi-asset 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 The Hartford with a short position of Blackrock Multi-asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Blackrock Multi-asset.
Diversification Opportunities for The Hartford and Blackrock Multi-asset
The 3 months correlation between The and Blackrock is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Balanced and Blackrock Multi Asset Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Multi Asset and The Hartford 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 The Hartford Balanced are associated (or correlated) with Blackrock Multi-asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Multi Asset has no effect on the direction of The Hartford i.e., The Hartford and Blackrock Multi-asset go up and down completely randomly.
Pair Corralation between The Hartford and Blackrock Multi-asset
Assuming the 90 days horizon The Hartford Balanced is expected to generate 1.46 times more return on investment than Blackrock Multi-asset. However, The Hartford is 1.46 times more volatile than Blackrock Multi Asset Income. It trades about 0.09 of its potential returns per unit of risk. Blackrock Multi Asset Income is currently generating about 0.08 per unit of risk. If you would invest 1,414 in The Hartford Balanced on March 5, 2024 and sell it today you would earn a total of 33.00 from holding The Hartford Balanced or generate 2.33% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Balanced are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, The Hartford is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Multi Asset Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Blackrock Multi-asset is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.