Correlation Between Dow Jones and The Hartford
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and The Hartford Midcap, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and The Hartford.
Diversification Opportunities for Dow Jones and The Hartford
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and The is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap and Dow Jones 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 Dow Jones Industrial 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 Midcap has no effect on the direction of Dow Jones i.e., Dow Jones and The Hartford go up and down completely randomly.
Pair Corralation between Dow Jones and The Hartford
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.69 times more return on investment than The Hartford. However, Dow Jones Industrial is 1.45 times less risky than The Hartford. It trades about 0.13 of its potential returns per unit of risk. The Hartford Midcap is currently generating about 0.08 per unit of risk. If you would invest 3,611,738 in Dow Jones Industrial on September 2, 2024 and sell it today you would earn a total of 879,327 from holding Dow Jones Industrial or generate 24.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. The Hartford Midcap
Performance |
| Timeline |
Dow Jones and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
The Hartford Midcap
Pair trading matchups for The Hartford
Pair Trading with Dow Jones and The Hartford
The main advantage of trading using opposite Dow Jones and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| The Hartford vs. Hennessy Nerstone Mid | The Hartford vs. Lord Abbett Small | The Hartford vs. Royce Opportunity Fund | The Hartford vs. Amg River Road |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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