Correlation Between Harbor Convertible and Hartford Small
Can any of the company-specific risk be diversified away by investing in both Harbor Convertible and Hartford 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 Harbor Convertible and Hartford Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Vertible Securities and Hartford Small Cap, you can compare the effects of market volatilities on Harbor Convertible and Hartford 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 Harbor Convertible with a short position of Hartford Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Convertible and Hartford Small.
Diversification Opportunities for Harbor Convertible and Hartford Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Harbor and Hartford is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Vertible Securities and Hartford Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small Cap and Harbor Convertible 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 Harbor Vertible Securities are associated (or correlated) with Hartford Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small Cap has no effect on the direction of Harbor Convertible i.e., Harbor Convertible and Hartford Small go up and down completely randomly.
Pair Corralation between Harbor Convertible and Hartford Small
Assuming the 90 days horizon Harbor Convertible is expected to generate 1.25 times less return on investment than Hartford Small. But when comparing it to its historical volatility, Harbor Vertible Securities is 2.84 times less risky than Hartford Small. It trades about 0.73 of its potential returns per unit of risk. Hartford Small Cap is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 2,669 in Hartford Small Cap on September 1, 2024 and sell it today you would earn a total of 280.00 from holding Hartford Small Cap or generate 10.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Harbor Vertible Securities vs. Hartford Small Cap
Performance |
| Timeline |
| Harbor Vertible Secu |
| Hartford Small Cap |
Harbor Convertible and Hartford Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor Convertible and Hartford Small
The main advantage of trading using opposite Harbor Convertible and Hartford Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Convertible position performs unexpectedly, Hartford 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 Hartford Small will offset losses from the drop in Hartford Small's long position.The idea behind Harbor Vertible Securities and Hartford 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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