Correlation Between SPDR MarketAxess and Hartford Municipal

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

By analyzing existing cross correlation between SPDR MarketAxess Investment and Hartford Municipal Opportunities, you can compare the effects of market volatilities on SPDR MarketAxess and Hartford Municipal 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 SPDR MarketAxess with a short position of Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR MarketAxess and Hartford Municipal.

Diversification Opportunities for SPDR MarketAxess and Hartford Municipal

0.72

Correlation Coefficient

SPDR MarketAxess  Hartford Municipal

Poor diversification

The 3 months correlation between SPDR and Hartford is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SPDR MarketAxess Investment and Hartford Municipal Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Municipal and SPDR MarketAxess 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 SPDR MarketAxess Investment are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Municipal has no effect on the direction of SPDR MarketAxess i.e., SPDR MarketAxess and Hartford Municipal go up and down completely randomly.

Pair Corralation between SPDR MarketAxess and Hartford Municipal

Given the investment horizon of 90 days SPDR MarketAxess Investment is expected to generate 1.74 times more return on investment than Hartford Municipal. However, SPDR MarketAxess is 1.74 times more volatile than Hartford Municipal Opportunities. It trades about 0.12 of its potential returns per unit of risk. Hartford Municipal Opportunities is currently generating about -0.05 per unit of risk. If you would invest  9,325  in SPDR MarketAxess Investment on March 12, 2024 and sell it today you would earn a total of  95.00  from holding SPDR MarketAxess Investment or generate 1.02% return on investment over 90 days.

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

SPDR MarketAxess Investment  vs.  Hartford Municipal Opportuniti

SPDR MarketAxess Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR MarketAxess Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, SPDR MarketAxess is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hartford Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Municipal Opportunities has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hartford Municipal is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SPDR MarketAxess and Hartford Municipal

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

The idea behind SPDR MarketAxess Investment and Hartford Municipal Opportunities 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.