Correlation Between Hartford Municipal and Overlay Shares
Can any of the company-specific risk be diversified away by investing in both Hartford Municipal and Overlay Shares 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 Municipal and Overlay Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Municipal Opportunities and Overlay Shares Municipal, you can compare the effects of market volatilities on Hartford Municipal and Overlay Shares 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 Municipal with a short position of Overlay Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Municipal and Overlay Shares.
Diversification Opportunities for Hartford Municipal and Overlay Shares
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hartford and Overlay is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Municipal Opportuniti and Overlay Shares Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Overlay Shares Municipal and Hartford Municipal 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 Municipal Opportunities are associated (or correlated) with Overlay Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Overlay Shares Municipal has no effect on the direction of Hartford Municipal i.e., Hartford Municipal and Overlay Shares go up and down completely randomly.
Pair Corralation between Hartford Municipal and Overlay Shares
Given the investment horizon of 90 days Hartford Municipal is expected to generate 1.84 times less return on investment than Overlay Shares. In addition to that, Hartford Municipal is 1.03 times more volatile than Overlay Shares Municipal. It trades about 0.07 of its total potential returns per unit of risk. Overlay Shares Municipal is currently generating about 0.13 per unit of volatility. If you would invest 2,209 in Overlay Shares Municipal on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Overlay Shares Municipal or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hartford Municipal Opportuniti vs. Overlay Shares Municipal
Performance |
| Timeline |
| Hartford Municipal |
| Overlay Shares Municipal |
Hartford Municipal and Overlay Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Municipal and Overlay Shares
The main advantage of trading using opposite Hartford Municipal and Overlay Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Municipal position performs unexpectedly, Overlay Shares 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 Overlay Shares will offset losses from the drop in Overlay Shares' long position.| Hartford Municipal vs. SSGA Active Trust | Hartford Municipal vs. SPDR MarketAxess Investment | Hartford Municipal vs. SSGA Active Trust |
| Overlay Shares vs. Overlay Shares Core | Overlay Shares vs. Overlay Shares Large | Overlay Shares vs. Overlay Shares Foreign | Overlay Shares vs. OVS SpA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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