Correlation Between The Hartford and Small Cap
Can any of the company-specific risk be diversified away by investing in both The Hartford 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 The Hartford 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 Equity, you can compare the effects of market volatilities on The Hartford 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 The Hartford with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Small Cap.
Diversification Opportunities for The Hartford and Small Cap
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between The and Small is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Equity and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity 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 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 Equity has no effect on the direction of The Hartford i.e., The Hartford and Small Cap go up and down completely randomly.
Pair Corralation between The Hartford and Small Cap
Assuming the 90 days horizon The Hartford is expected to generate 2.21 times less return on investment than Small Cap. But when comparing it to its historical volatility, The Hartford Equity is 2.45 times less risky than Small Cap. It trades about 0.32 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,852 in Small Cap Equity on September 3, 2024 and sell it today you would earn a total of 179.00 from holding Small Cap Equity or generate 9.67% 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 Equity
Performance |
| Timeline |
| Hartford Equity |
| Small Cap Equity |
The Hartford and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Small Cap
The main advantage of trading using opposite The Hartford and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford 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.| The Hartford vs. Calvert Global Energy | The Hartford vs. Salient Mlp Energy | The Hartford vs. Tortoise Energy Independence | The Hartford vs. Oil Gas Ultrasector |
| Small Cap vs. Semiconductor Ultrasector Profund | Small Cap vs. Qs Large Cap | Small Cap vs. Fm Investments Large | Small Cap vs. T Rowe Price |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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