Correlation Between The Hartford and Alphacentric Lifesci
Can any of the company-specific risk be diversified away by investing in both The Hartford and Alphacentric Lifesci 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 Alphacentric Lifesci into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Healthcare and Alphacentric Lifesci Healthcare, you can compare the effects of market volatilities on The Hartford and Alphacentric Lifesci 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 Alphacentric Lifesci. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Alphacentric Lifesci.
Diversification Opportunities for The Hartford and Alphacentric Lifesci
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THE and Alphacentric is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Healthcare and Alphacentric Lifesci Healthcar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphacentric Lifesci 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 Healthcare are associated (or correlated) with Alphacentric Lifesci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphacentric Lifesci has no effect on the direction of The Hartford i.e., The Hartford and Alphacentric Lifesci go up and down completely randomly.
Pair Corralation between The Hartford and Alphacentric Lifesci
Assuming the 90 days horizon The Hartford Healthcare is expected to generate 1.11 times more return on investment than Alphacentric Lifesci. However, The Hartford is 1.11 times more volatile than Alphacentric Lifesci Healthcare. It trades about 0.01 of its potential returns per unit of risk. Alphacentric Lifesci Healthcare is currently generating about -0.01 per unit of risk. If you would invest 4,371 in The Hartford Healthcare on September 1, 2024 and sell it today you would earn a total of 3.00 from holding The Hartford Healthcare or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Healthcare vs. Alphacentric Lifesci Healthcar
Performance |
| Timeline |
| The Hartford Healthcare |
| Alphacentric Lifesci |
The Hartford and Alphacentric Lifesci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Alphacentric Lifesci
The main advantage of trading using opposite The Hartford and Alphacentric Lifesci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Alphacentric Lifesci 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 Alphacentric Lifesci will offset losses from the drop in Alphacentric Lifesci's long position.| The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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