Correlation Between The Hartford and Westwood Income
Can any of the company-specific risk be diversified away by investing in both The Hartford and Westwood Income 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 Westwood Income 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 Westwood Income Opportunity, you can compare the effects of market volatilities on The Hartford and Westwood Income 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 Westwood Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Westwood Income.
Diversification Opportunities for The Hartford and Westwood Income
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between The and Westwood is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Balanced and Westwood Income Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Income Oppo 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 Westwood Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Income Oppo has no effect on the direction of The Hartford i.e., The Hartford and Westwood Income go up and down completely randomly.
Pair Corralation between The Hartford and Westwood Income
Assuming the 90 days horizon The Hartford is expected to generate 1.8 times less return on investment than Westwood Income. But when comparing it to its historical volatility, The Hartford Balanced is 1.12 times less risky than Westwood Income. It trades about 0.12 of its potential returns per unit of risk. Westwood Income Opportunity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,191 in Westwood Income Opportunity on August 31, 2024 and sell it today you would earn a total of 53.00 from holding Westwood Income Opportunity or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Balanced vs. Westwood Income Opportunity
Performance |
| Timeline |
| Hartford Balanced |
| Westwood Income Oppo |
The Hartford and Westwood Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Westwood Income
The main advantage of trading using opposite The Hartford and Westwood Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Westwood Income 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 Westwood Income will offset losses from the drop in Westwood Income's long position.| The Hartford vs. The Hartford Balanced | The Hartford vs. Capital Income Builder | The Hartford vs. Calvert Large Cap | The Hartford vs. The Hartford Balanced |
| Westwood Income vs. California High Yield Municipal | Westwood Income vs. Alliancebernstein National Municipal | Westwood Income vs. Bbh Intermediate Municipal | Westwood Income vs. Morningstar Municipal Bond |
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.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |