Correlation Between World Energy and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both World Energy 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 World Energy and Hartford Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Energy Fund and The Hartford Municipal, you can compare the effects of market volatilities on World Energy 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 World Energy with a short position of Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Energy and Hartford Municipal.
Diversification Opportunities for World Energy and Hartford Municipal
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between World and Hartford is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding World Energy Fund 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 World Energy 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 World Energy Fund 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 The Hartford Municipal has no effect on the direction of World Energy i.e., World Energy and Hartford Municipal go up and down completely randomly.
Pair Corralation between World Energy and Hartford Municipal
Assuming the 90 days horizon World Energy Fund is expected to generate 5.08 times more return on investment than Hartford Municipal. However, World Energy is 5.08 times more volatile than The Hartford Municipal. It trades about 0.27 of its potential returns per unit of risk. The Hartford Municipal is currently generating about 0.2 per unit of risk. If you would invest 1,423 in World Energy Fund on August 31, 2024 and sell it today you would earn a total of 109.00 from holding World Energy Fund or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Energy Fund vs. The Hartford Municipal
Performance |
| Timeline |
| World Energy |
| The Hartford Municipal |
World Energy and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Energy and Hartford Municipal
The main advantage of trading using opposite World Energy and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Energy 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.| World Energy vs. Columbia Vertible Securities | World Energy vs. Advent Claymore Convertible | World Energy vs. Absolute Convertible Arbitrage | World Energy vs. Calamos Dynamic Convertible |
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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