Correlation Between The Hartford and Balanced Allocation

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Can any of the company-specific risk be diversified away by investing in both The Hartford and Balanced Allocation 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 The Hartford and Balanced Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Balanced and Balanced Allocation Fund, you can compare the effects of market volatilities on The Hartford and Balanced Allocation 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 The Hartford with a short position of Balanced Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Balanced Allocation.

Diversification Opportunities for The Hartford and Balanced Allocation

TheBalancedDiversified AwayTheBalancedDiversified Away100%
0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between The and Balanced is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Balanced and Balanced Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Allocation and The Hartford 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 The Hartford Balanced are associated (or correlated) with Balanced Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Allocation has no effect on the direction of The Hartford i.e., The Hartford and Balanced Allocation go up and down completely randomly.

Pair Corralation between The Hartford and Balanced Allocation

Assuming the 90 days horizon The Hartford is expected to generate 1.73 times less return on investment than Balanced Allocation. In addition to that, The Hartford is 1.07 times more volatile than Balanced Allocation Fund. It trades about 0.04 of its total potential returns per unit of risk. Balanced Allocation Fund is currently generating about 0.08 per unit of volatility. If you would invest  1,103  in Balanced Allocation Fund on November 21, 2024 and sell it today you would earn a total of  84.00  from holding Balanced Allocation Fund or generate 7.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.56%
ValuesDaily Returns

The Hartford Balanced  vs.  Balanced Allocation Fund

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -7-6-5-4-3-2-10
JavaScript chart by amCharts 3.21.15HBLRX GGIZX
       Timeline  
Hartford Balanced 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days The Hartford Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb14.214.414.614.81515.2
Balanced Allocation 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Allocation Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Balanced Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.411.511.611.711.811.9

The Hartford and Balanced Allocation Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-0.95-0.68-0.41-0.14-0.01220.08250.320.590.86 0.51.01.52.0
JavaScript chart by amCharts 3.21.15HBLRX GGIZX
       Returns  

Pair Trading with The Hartford and Balanced Allocation

The main advantage of trading using opposite The Hartford and Balanced Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Balanced Allocation 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 Balanced Allocation will offset losses from the drop in Balanced Allocation's long position.
The idea behind The Hartford Balanced and Balanced Allocation Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Correlations module to find global opportunities by holding instruments from different markets.

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