Correlation Between The Hartford and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both The Hartford and Federated Kaufmann 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 Federated Kaufmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Midcap and Federated Kaufmann Small, you can compare the effects of market volatilities on The Hartford and Federated Kaufmann 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 Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Federated Kaufmann.
Diversification Opportunities for The Hartford and Federated Kaufmann
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between The and Federated is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Midcap and Federated Kaufmann Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Small 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 Midcap are associated (or correlated) with Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Small has no effect on the direction of The Hartford i.e., The Hartford and Federated Kaufmann go up and down completely randomly.
Pair Corralation between The Hartford and Federated Kaufmann
Assuming the 90 days horizon The Hartford is expected to generate 1.22 times less return on investment than Federated Kaufmann. But when comparing it to its historical volatility, The Hartford Midcap is 1.07 times less risky than Federated Kaufmann. It trades about 0.04 of its potential returns per unit of risk. Federated Kaufmann Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,167 in Federated Kaufmann Small on September 4, 2024 and sell it today you would earn a total of 1,236 from holding Federated Kaufmann Small or generate 29.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Midcap vs. Federated Kaufmann Small
Performance |
| Timeline |
| Hartford Midcap |
| Federated Kaufmann Small |
The Hartford and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Federated Kaufmann
The main advantage of trading using opposite The Hartford and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann's long position.| The Hartford vs. Europacific Growth Fund | The Hartford vs. Washington Mutual Investors | The Hartford vs. Wells Fargo Special | The Hartford vs. Mfs Emerging Markets |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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