Correlation Between The Hartford and Needham Small
Can any of the company-specific risk be diversified away by investing in both The Hartford and Needham Small 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 Needham Small 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 Needham Small Cap, you can compare the effects of market volatilities on The Hartford and Needham Small 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 Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Needham Small.
Diversification Opportunities for The Hartford and Needham Small
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between The and Needham is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Midcap and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Small Cap 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 Needham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of The Hartford i.e., The Hartford and Needham Small go up and down completely randomly.
Pair Corralation between The Hartford and Needham Small
Assuming the 90 days horizon The Hartford is expected to generate 1.18 times less return on investment than Needham Small. But when comparing it to its historical volatility, The Hartford Midcap is 1.66 times less risky than Needham Small. It trades about 0.05 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,673 in Needham Small Cap on September 1, 2024 and sell it today you would earn a total of 350.00 from holding Needham Small Cap or generate 20.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
The Hartford Midcap vs. Needham Small Cap
Performance |
| Timeline |
| Hartford Midcap |
| Needham Small Cap |
The Hartford and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Needham Small
The main advantage of trading using opposite The Hartford and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Needham Small 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 Needham Small will offset losses from the drop in Needham Small'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 |
| Needham Small vs. Needham Small Cap | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Ultramid Cap Profund Ultramid Cap |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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