Correlation Between Hartford Healthcare and Prudential Health
Can any of the company-specific risk be diversified away by investing in both Hartford Healthcare and Prudential Health 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 Prudential Health 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 Prudential Health Sciences, you can compare the effects of market volatilities on Hartford Healthcare and Prudential Health 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 Prudential Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and Prudential Health.
Diversification Opportunities for Hartford Healthcare and Prudential Health
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartford and Prudential is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls and Prudential Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Health 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 Prudential Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Health has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and Prudential Health go up and down completely randomly.
Pair Corralation between Hartford Healthcare and Prudential Health
Assuming the 90 days horizon Hartford Healthcare Hls is expected to generate 0.62 times more return on investment than Prudential Health. However, Hartford Healthcare Hls is 1.6 times less risky than Prudential Health. It trades about 0.01 of its potential returns per unit of risk. Prudential Health Sciences is currently generating about -0.03 per unit of risk. If you would invest 1,709 in Hartford Healthcare Hls on November 3, 2024 and sell it today you would earn a total of 26.00 from holding Hartford Healthcare Hls or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Healthcare Hls vs. Prudential Health Sciences
Performance |
| Timeline |
| Hartford Healthcare Hls |
| Prudential Health |
Hartford Healthcare and Prudential Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Healthcare and Prudential Health
The main advantage of trading using opposite Hartford Healthcare and Prudential Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Healthcare position performs unexpectedly, Prudential Health 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 Prudential Health will offset losses from the drop in Prudential Health's long position.| Hartford Healthcare vs. William Blair Small | Hartford Healthcare vs. Small Cap Value Fund | Hartford Healthcare vs. American Century Etf | Hartford Healthcare vs. Valic Company I |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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