Correlation Between Hartford Healthcare and College Retirement
Can any of the company-specific risk be diversified away by investing in both Hartford Healthcare and College Retirement 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 College Retirement 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 College Retirement Equities, you can compare the effects of market volatilities on Hartford Healthcare and College Retirement 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 College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and College Retirement.
Diversification Opportunities for Hartford Healthcare and College Retirement
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hartford and College is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement 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 College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and College Retirement go up and down completely randomly.
Pair Corralation between Hartford Healthcare and College Retirement
Assuming the 90 days horizon Hartford Healthcare is expected to generate 3.1 times less return on investment than College Retirement. But when comparing it to its historical volatility, Hartford Healthcare Hls is 1.02 times less risky than College Retirement. It trades about 0.03 of its potential returns per unit of risk. College Retirement Equities is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 24,872 in College Retirement Equities on October 30, 2024 and sell it today you would earn a total of 9,925 from holding College Retirement Equities or generate 39.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Healthcare Hls vs. College Retirement Equities
Performance |
| Timeline |
| Hartford Healthcare Hls |
| College Retirement |
Hartford Healthcare and College Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Healthcare and College Retirement
The main advantage of trading using opposite Hartford Healthcare and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Healthcare position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement's long position.The idea behind Hartford Healthcare Hls and College Retirement Equities 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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