Correlation Between Hartford Moderate and Madison Investors
Can any of the company-specific risk be diversified away by investing in both Hartford Moderate and Madison Investors 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 Hartford Moderate and Madison Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Moderate Allocation and Madison Investors Fund, you can compare the effects of market volatilities on Hartford Moderate and Madison Investors 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 Hartford Moderate with a short position of Madison Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Moderate and Madison Investors.
Diversification Opportunities for Hartford Moderate and Madison Investors
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HARTFORD and Madison is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Moderate Allocation and Madison Investors Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Investors and Hartford Moderate 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 Hartford Moderate Allocation are associated (or correlated) with Madison Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Investors has no effect on the direction of Hartford Moderate i.e., Hartford Moderate and Madison Investors go up and down completely randomly.
Pair Corralation between Hartford Moderate and Madison Investors
Assuming the 90 days horizon Hartford Moderate is expected to generate 6.53 times less return on investment than Madison Investors. But when comparing it to its historical volatility, Hartford Moderate Allocation is 1.99 times less risky than Madison Investors. It trades about 0.04 of its potential returns per unit of risk. Madison Investors Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,087 in Madison Investors Fund on August 29, 2024 and sell it today you would earn a total of 139.00 from holding Madison Investors Fund or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Hartford Moderate Allocation vs. Madison Investors Fund
Performance |
| Timeline |
| Hartford Moderate |
| Madison Investors |
Hartford Moderate and Madison Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Moderate and Madison Investors
The main advantage of trading using opposite Hartford Moderate and Madison Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Moderate position performs unexpectedly, Madison Investors 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 Madison Investors will offset losses from the drop in Madison Investors' long position.| Hartford Moderate vs. American Balanced Fund | Hartford Moderate vs. American Balanced Fund | Hartford Moderate vs. HUMANA INC | Hartford Moderate vs. Aquagold International |
| Madison Investors vs. Massmutual Premier Diversified | Madison Investors vs. Pioneer Diversified High | Madison Investors vs. Adams Diversified Equity | Madison Investors vs. Jhancock Diversified Macro |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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