Correlation Between The Hartford and Pace Municipal
Can any of the company-specific risk be diversified away by investing in both The Hartford and Pace 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 The Hartford and Pace 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 Pace Municipal Fixed, you can compare the effects of market volatilities on The Hartford and Pace 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 The Hartford with a short position of Pace Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Pace Municipal.
Diversification Opportunities for The Hartford and Pace Municipal
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between THE and PACE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Equity and Pace Municipal Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Municipal Fixed 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 Pace Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Municipal Fixed has no effect on the direction of The Hartford i.e., The Hartford and Pace Municipal go up and down completely randomly.
Pair Corralation between The Hartford and Pace Municipal
Assuming the 90 days horizon The Hartford Equity is expected to generate 4.74 times more return on investment than Pace Municipal. However, The Hartford is 4.74 times more volatile than Pace Municipal Fixed. It trades about 0.01 of its potential returns per unit of risk. Pace Municipal Fixed is currently generating about 0.07 per unit of risk. If you would invest 2,206 in The Hartford Equity on August 26, 2024 and sell it today you would earn a total of 100.00 from holding The Hartford Equity or generate 4.53% 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. Pace Municipal Fixed
Performance |
| Timeline |
| Hartford Equity |
| Pace Municipal Fixed |
The Hartford and Pace Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Pace Municipal
The main advantage of trading using opposite The Hartford and Pace Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Pace 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 Pace Municipal will offset losses from the drop in Pace Municipal's long position.| The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth |
| Pace Municipal vs. Scharf Fund Retail | Pace Municipal vs. The Hartford Equity | Pace Municipal vs. Small Cap Equity | Pace Municipal vs. Touchstone International Equity |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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