Correlation Between Hartford Healthcare and Aqr Small
Can any of the company-specific risk be diversified away by investing in both Hartford Healthcare and Aqr 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 Hartford Healthcare and Aqr Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Healthcare Hls and Aqr Small Cap, you can compare the effects of market volatilities on Hartford Healthcare and Aqr 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 Hartford Healthcare with a short position of Aqr Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and Aqr Small.
Diversification Opportunities for Hartford Healthcare and Aqr Small
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hartford and Aqr is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls and Aqr Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Small Cap and Hartford Healthcare 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 Hartford Healthcare Hls are associated (or correlated) with Aqr Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Small Cap has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and Aqr Small go up and down completely randomly.
Pair Corralation between Hartford Healthcare and Aqr Small
Assuming the 90 days horizon Hartford Healthcare Hls is expected to under-perform the Aqr Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hartford Healthcare Hls is 1.17 times less risky than Aqr Small. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Aqr Small Cap is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,495 in Aqr Small Cap on September 13, 2024 and sell it today you would lose (38.00) from holding Aqr Small Cap or give up 1.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hartford Healthcare Hls vs. Aqr Small Cap
Performance |
| Timeline |
| Hartford Healthcare Hls |
| Aqr Small Cap |
Hartford Healthcare and Aqr Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Healthcare and Aqr Small
The main advantage of trading using opposite Hartford Healthcare and Aqr Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Healthcare position performs unexpectedly, Aqr 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 Aqr Small will offset losses from the drop in Aqr Small's long position.The idea behind Hartford Healthcare Hls and Aqr Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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