Correlation Between Hartford Equity and Small Cap
Can any of the company-specific risk be diversified away by investing in both Hartford Equity and Small Cap 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 Small Cap 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 Small Cap Growth, you can compare the effects of market volatilities on Hartford Equity and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Equity and Small Cap.
Diversification Opportunities for Hartford Equity and Small Cap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hartford and Small is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Equity and Small Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Growth 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Growth has no effect on the direction of Hartford Equity i.e., Hartford Equity and Small Cap go up and down completely randomly.
Pair Corralation between Hartford Equity and Small Cap
Assuming the 90 days horizon Hartford Equity is expected to generate 1.59 times less return on investment than Small Cap. But when comparing it to its historical volatility, The Hartford Equity is 1.61 times less risky than Small Cap. It trades about 0.07 of its potential returns per unit of risk. Small Cap Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,321 in Small Cap Growth on September 2, 2024 and sell it today you would earn a total of 396.00 from holding Small Cap Growth or generate 29.98% 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 Equity vs. Small Cap Growth
Performance |
| Timeline |
| Hartford Equity |
| Small Cap Growth |
Hartford Equity and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Equity and Small Cap
The main advantage of trading using opposite Hartford Equity and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Equity position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Hartford Equity vs. Strategic Allocation Aggressive | Hartford Equity vs. Touchstone Large Cap | Hartford Equity vs. Legg Mason Bw | Hartford Equity vs. T Rowe Price |
| Small Cap vs. Gabelli Convertible And | Small Cap vs. Fidelity Sai Convertible | Small Cap vs. Rationalpier 88 Convertible | Small Cap vs. Advent Claymore Convertible |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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