Correlation Between The Hartford and American Beacon
Can any of the company-specific risk be diversified away by investing in both The Hartford and American Beacon 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 American Beacon 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 American Beacon Stephens, you can compare the effects of market volatilities on The Hartford and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and American Beacon.
Diversification Opportunities for The Hartford and American Beacon
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between The and American is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Midcap and American Beacon Stephens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Stephens 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Stephens has no effect on the direction of The Hartford i.e., The Hartford and American Beacon go up and down completely randomly.
Pair Corralation between The Hartford and American Beacon
Assuming the 90 days horizon The Hartford is expected to generate 1.24 times less return on investment than American Beacon. But when comparing it to its historical volatility, The Hartford Midcap is 1.06 times less risky than American Beacon. It trades about 0.08 of its potential returns per unit of risk. American Beacon Stephens is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,092 in American Beacon Stephens on September 4, 2024 and sell it today you would earn a total of 291.00 from holding American Beacon Stephens or generate 26.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Hartford Midcap vs. American Beacon Stephens
Performance |
| Timeline |
| Hartford Midcap |
| American Beacon Stephens |
The Hartford and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and American Beacon
The main advantage of trading using opposite The Hartford and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon'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 |
| American Beacon vs. American Beacon Stephens | American Beacon vs. Alger Small Cap | American Beacon vs. Amg Timessquare Small | American Beacon vs. Hotchkis Wiley Large |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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