Correlation Between Hartford Healthcare and American Funds
Can any of the company-specific risk be diversified away by investing in both Hartford Healthcare and American Funds 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 Healthcare and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Healthcare Hls and American Funds Income, you can compare the effects of market volatilities on Hartford Healthcare and American Funds 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 Healthcare with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and American Funds.
Diversification Opportunities for Hartford Healthcare and American Funds
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartford and American is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income and Hartford Healthcare 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 Healthcare Hls are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and American Funds go up and down completely randomly.
Pair Corralation between Hartford Healthcare and American Funds
Assuming the 90 days horizon Hartford Healthcare Hls is expected to generate 2.33 times more return on investment than American Funds. However, Hartford Healthcare is 2.33 times more volatile than American Funds Income. It trades about 0.25 of its potential returns per unit of risk. American Funds Income is currently generating about 0.26 per unit of risk. If you would invest 1,454 in Hartford Healthcare Hls on November 4, 2024 and sell it today you would earn a total of 67.00 from holding Hartford Healthcare Hls or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Healthcare Hls vs. American Funds Income
Performance |
| Timeline |
| Hartford Healthcare Hls |
| American Funds Income |
Hartford Healthcare and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Healthcare and American Funds
The main advantage of trading using opposite Hartford Healthcare and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Healthcare position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Hartford Healthcare vs. Franklin Adjustable Government | Hartford Healthcare vs. Elfun Government Money | Hartford Healthcare vs. Voya Government Money | Hartford Healthcare vs. Intermediate Government Bond |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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