Correlation Between Short Duration and The Hartford
Can any of the company-specific risk be diversified away by investing in both Short Duration and The Hartford 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 Short Duration and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Duration Inflation and The Hartford Municipal, you can compare the effects of market volatilities on Short Duration and The Hartford 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 Short Duration with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and The Hartford.
Diversification Opportunities for Short Duration and The Hartford
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Short and The is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and The Hartford Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Municipal and Short Duration 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 Short Duration Inflation are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Municipal has no effect on the direction of Short Duration i.e., Short Duration and The Hartford go up and down completely randomly.
Pair Corralation between Short Duration and The Hartford
Assuming the 90 days horizon Short Duration is expected to generate 1.9 times less return on investment than The Hartford. But when comparing it to its historical volatility, Short Duration Inflation is 1.94 times less risky than The Hartford. It trades about 0.13 of its potential returns per unit of risk. The Hartford Municipal is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 833.00 in The Hartford Municipal on August 29, 2024 and sell it today you would earn a total of 6.00 from holding The Hartford Municipal or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Duration Inflation vs. The Hartford Municipal
Performance |
| Timeline |
| Short Duration Inflation |
| The Hartford Municipal |
Short Duration and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Duration and The Hartford
The main advantage of trading using opposite Short Duration and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Short Duration vs. Short Real Estate | Short Duration vs. Short Real Estate | Short Duration vs. Short Term Government Fund | Short Duration vs. Short Duration Bond |
| The Hartford vs. Vanguard Intermediate Term Tax Exempt | The Hartford vs. Vanguard Intermediate Term Tax Exempt | The Hartford vs. Tax Exempt Bond | The Hartford vs. Tax Exempt Bond |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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