Correlation Between The Hartford and Parametric International
Can any of the company-specific risk be diversified away by investing in both The Hartford and Parametric International 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 Parametric International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Equity and Parametric International Equity, you can compare the effects of market volatilities on The Hartford and Parametric International 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 Parametric International. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Parametric International.
Diversification Opportunities for The Hartford and Parametric International
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between The and Parametric is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Equity and Parametric International Equit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parametric International 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 Equity are associated (or correlated) with Parametric International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parametric International has no effect on the direction of The Hartford i.e., The Hartford and Parametric International go up and down completely randomly.
Pair Corralation between The Hartford and Parametric International
Assuming the 90 days horizon The Hartford Equity is expected to generate 0.83 times more return on investment than Parametric International. However, The Hartford Equity is 1.21 times less risky than Parametric International. It trades about 0.14 of its potential returns per unit of risk. Parametric International Equity is currently generating about -0.01 per unit of risk. If you would invest 2,060 in The Hartford Equity on September 3, 2024 and sell it today you would earn a total of 237.00 from holding The Hartford Equity or generate 11.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Equity vs. Parametric International Equit
Performance |
| Timeline |
| Hartford Equity |
| Parametric International |
The Hartford and Parametric International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Parametric International
The main advantage of trading using opposite The Hartford and Parametric International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Parametric International 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 Parametric International will offset losses from the drop in Parametric International's long position.| The Hartford vs. The Hartford Dividend | The Hartford vs. The Hartford Total | The Hartford vs. The Hartford International | The Hartford vs. The Hartford Midcap |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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