Correlation Between American International and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both American International and Hartford Financial 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 American International and Hartford Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American International Group and Hartford Financial Services, you can compare the effects of market volatilities on American International and Hartford Financial 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 American International with a short position of Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of American International and Hartford Financial.
Diversification Opportunities for American International and Hartford Financial
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Hartford is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding American International Group and Hartford Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Financial and American International 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 American International Group are associated (or correlated) with Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Financial has no effect on the direction of American International i.e., American International and Hartford Financial go up and down completely randomly.
Pair Corralation between American International and Hartford Financial
Considering the 90-day investment horizon American International is expected to generate 3.49 times less return on investment than Hartford Financial. But when comparing it to its historical volatility, American International Group is 1.01 times less risky than Hartford Financial. It trades about 0.03 of its potential returns per unit of risk. Hartford Financial Services is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9,455 in Hartford Financial Services on August 27, 2024 and sell it today you would earn a total of 2,617 from holding Hartford Financial Services or generate 27.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American International Group vs. Hartford Financial Services
Performance |
| Timeline |
| American International |
| Hartford Financial |
American International and Hartford Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American International and Hartford Financial
The main advantage of trading using opposite American International and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American International position performs unexpectedly, Hartford Financial 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 Financial will offset losses from the drop in Hartford Financial's long position.| American International vs. Axa Equitable Holdings | American International vs. Arch Capital Group | American International vs. Old Republic International | American International vs. Sun Life Financial |
| Hartford Financial vs. Goosehead Insurance | Hartford Financial vs. International General Insurance | Hartford Financial vs. Enstar Group Limited | Hartford Financial vs. Arch Capital Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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