Correlation Between Hartford Equity and Maine Municipal
Can any of the company-specific risk be diversified away by investing in both Hartford Equity and Maine Municipal 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 Equity and Maine Municipal 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 Maine Municipal Fund, you can compare the effects of market volatilities on Hartford Equity and Maine Municipal 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 Equity with a short position of Maine Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Equity and Maine Municipal.
Diversification Opportunities for Hartford Equity and Maine Municipal
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hartford and Maine is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Equity and Maine Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maine Municipal and Hartford Equity 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 Maine Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maine Municipal has no effect on the direction of Hartford Equity i.e., Hartford Equity and Maine Municipal go up and down completely randomly.
Pair Corralation between Hartford Equity and Maine Municipal
Assuming the 90 days horizon The Hartford Equity is expected to generate 1.96 times more return on investment than Maine Municipal. However, Hartford Equity is 1.96 times more volatile than Maine Municipal Fund. It trades about 0.29 of its potential returns per unit of risk. Maine Municipal Fund is currently generating about 0.25 per unit of risk. If you would invest 2,207 in The Hartford Equity on September 1, 2024 and sell it today you would earn a total of 90.00 from holding The Hartford Equity or generate 4.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Equity vs. Maine Municipal Fund
Performance |
| Timeline |
| Hartford Equity |
| Maine Municipal |
Hartford Equity and Maine Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Equity and Maine Municipal
The main advantage of trading using opposite Hartford Equity and Maine Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Equity position performs unexpectedly, Maine Municipal 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 Maine Municipal will offset losses from the drop in Maine Municipal's long position.| Hartford Equity vs. The Hartford Dividend | Hartford Equity vs. The Hartford Total | Hartford Equity vs. The Hartford International | Hartford Equity vs. The Hartford Midcap |
| Maine Municipal vs. Government Securities Fund | Maine Municipal vs. Fidelity Series Government | Maine Municipal vs. Dreyfus Government Cash | Maine Municipal vs. Aig Government Money |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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