Correlation Between The Hartford and Investment Grade
Can any of the company-specific risk be diversified away by investing in both The Hartford and Investment Grade 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 Investment Grade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Inflation and Investment Grade Porate, you can compare the effects of market volatilities on The Hartford and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Investment Grade.
Diversification Opportunities for The Hartford and Investment Grade
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between THE and Investment is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Inflation and Investment Grade Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade Porate 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 Inflation are associated (or correlated) with Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Porate has no effect on the direction of The Hartford i.e., The Hartford and Investment Grade go up and down completely randomly.
Pair Corralation between The Hartford and Investment Grade
Assuming the 90 days horizon The Hartford is expected to generate 1.65 times less return on investment than Investment Grade. But when comparing it to its historical volatility, The Hartford Inflation is 1.3 times less risky than Investment Grade. It trades about 0.04 of its potential returns per unit of risk. Investment Grade Porate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 820.00 in Investment Grade Porate on August 29, 2024 and sell it today you would earn a total of 85.00 from holding Investment Grade Porate or generate 10.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Inflation vs. Investment Grade Porate
Performance |
| Timeline |
| The Hartford Inflation |
| Investment Grade Porate |
The Hartford and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Investment Grade
The main advantage of trading using opposite The Hartford and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's long position.| The Hartford vs. Vanguard Inflation Protected Securities | The Hartford vs. HUMANA INC | The Hartford vs. Aquagold International | The Hartford vs. Barloworld Ltd ADR |
| Investment Grade vs. Ab Municipal Bond | Investment Grade vs. Goldman Sachs Inflation | Investment Grade vs. The Hartford Inflation | Investment Grade vs. Ab Bond Inflation |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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