Correlation Between The Hartford and Hartford Small
Can any of the company-specific risk be diversified away by investing in both The Hartford and Hartford 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 Hartford Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Growth and The Hartford Small, you can compare the effects of market volatilities on The Hartford and Hartford 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 Hartford Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Hartford Small.
Diversification Opportunities for The Hartford and Hartford Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between The and Hartford is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford 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 Growth are associated (or correlated) with Hartford Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of The Hartford i.e., The Hartford and Hartford Small go up and down completely randomly.
Pair Corralation between The Hartford and Hartford Small
Assuming the 90 days horizon The Hartford is expected to generate 1.84 times less return on investment than Hartford Small. But when comparing it to its historical volatility, The Hartford Growth is 1.27 times less risky than Hartford Small. It trades about 0.16 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,236 in The Hartford Small on August 26, 2024 and sell it today you would earn a total of 169.00 from holding The Hartford Small or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Growth vs. The Hartford Small
Performance |
| Timeline |
| Hartford Growth |
| Hartford Small |
The Hartford and Hartford Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Hartford Small
The main advantage of trading using opposite The Hartford and Hartford Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Hartford 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 Hartford Small will offset losses from the drop in Hartford Small's long position.| The Hartford vs. Pgim Conservative Retirement | The Hartford vs. Fidelity Advisor Diversified | The Hartford vs. Pioneer Diversified High | The Hartford vs. Prudential Core Conservative |
| Hartford Small vs. The Hartford Small | Hartford Small vs. Omni Small Cap Value | Hartford Small vs. Champlain Small | Hartford Small vs. Artisan Small 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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