Correlation Between American Funds and Hartford Moderate
Can any of the company-specific risk be diversified away by investing in both American Funds and Hartford Moderate 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 Funds and Hartford Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Hartford Moderate Allocation, you can compare the effects of market volatilities on American Funds and Hartford Moderate 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 Funds with a short position of Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Hartford Moderate.
Diversification Opportunities for American Funds and Hartford Moderate
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Hartford is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate and American Funds 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 Funds American are associated (or correlated) with Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of American Funds i.e., American Funds and Hartford Moderate go up and down completely randomly.
Pair Corralation between American Funds and Hartford Moderate
Assuming the 90 days horizon American Funds is expected to generate 1.43 times less return on investment than Hartford Moderate. In addition to that, American Funds is 1.01 times more volatile than Hartford Moderate Allocation. It trades about 0.04 of its total potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.05 per unit of volatility. If you would invest 1,315 in Hartford Moderate Allocation on November 29, 2024 and sell it today you would earn a total of 6.00 from holding Hartford Moderate Allocation or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds American vs. Hartford Moderate Allocation
Performance |
| Timeline |
| American Funds American |
| Hartford Moderate |
American Funds and Hartford Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Hartford Moderate
The main advantage of trading using opposite American Funds and Hartford Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Hartford Moderate 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 Moderate will offset losses from the drop in Hartford Moderate's long position.| American Funds vs. Blackrock Large Cap | American Funds vs. Dodge Cox Stock | American Funds vs. Fidelity Large Cap | American Funds vs. Guidemark Large Cap |
| Hartford Moderate vs. The Hartford Growth | Hartford Moderate vs. The Hartford Growth | Hartford Moderate vs. The Hartford Growth | Hartford Moderate vs. Hartford Growth Opportunities |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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