Correlation Between Strategic Income and The Hartford
Can any of the company-specific risk be diversified away by investing in both Strategic Income 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 Strategic Income and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Income Fund and The Hartford Emerging, you can compare the effects of market volatilities on Strategic Income 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 Strategic Income with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Income and The Hartford.
Diversification Opportunities for Strategic Income and The Hartford
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Strategic and THE is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Income Fund and The Hartford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Emerging and Strategic Income 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 Strategic Income Fund 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 Hartford Emerging has no effect on the direction of Strategic Income i.e., Strategic Income and The Hartford go up and down completely randomly.
Pair Corralation between Strategic Income and The Hartford
Assuming the 90 days horizon Strategic Income Fund is expected to generate 0.61 times more return on investment than The Hartford. However, Strategic Income Fund is 1.65 times less risky than The Hartford. It trades about 0.15 of its potential returns per unit of risk. The Hartford Emerging is currently generating about 0.03 per unit of risk. If you would invest 852.00 in Strategic Income Fund on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Strategic Income Fund or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Strategic Income Fund vs. The Hartford Emerging
Performance |
| Timeline |
| Strategic Income |
| Hartford Emerging |
Strategic Income and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Income and The Hartford
The main advantage of trading using opposite Strategic Income and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Income 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.| Strategic Income vs. The Hartford Emerging | Strategic Income vs. Shelton Emerging Markets | Strategic Income vs. Morgan Stanley Emerging | Strategic Income vs. Locorr Market Trend |
| The Hartford vs. HUMANA INC | The Hartford vs. Aquagold International | The Hartford vs. Barloworld Ltd ADR | The Hartford vs. Morningstar Unconstrained Allocation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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