Correlation Between The Hartford and Hartford Municipal
Can any of the company-specific risk be diversified away by investing in both The Hartford and Hartford 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 Hartford Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Dividend and The Hartford Municipal, you can compare the effects of market volatilities on The Hartford and Hartford 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 Hartford Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Hartford Municipal.
Diversification Opportunities for The Hartford and Hartford Municipal
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between The and Hartford is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Dividend and The Hartford Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Municipal 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 Dividend are associated (or correlated) with Hartford Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Municipal has no effect on the direction of The Hartford i.e., The Hartford and Hartford Municipal go up and down completely randomly.
Pair Corralation between The Hartford and Hartford Municipal
Assuming the 90 days horizon The Hartford Dividend is expected to generate 3.19 times more return on investment than Hartford Municipal. However, The Hartford is 3.19 times more volatile than The Hartford Municipal. It trades about 0.11 of its potential returns per unit of risk. The Hartford Municipal is currently generating about 0.1 per unit of risk. If you would invest 2,983 in The Hartford Dividend on August 31, 2024 and sell it today you would earn a total of 836.00 from holding The Hartford Dividend or generate 28.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Dividend vs. The Hartford Municipal
Performance |
| Timeline |
| Hartford Dividend |
| The Hartford Municipal |
The Hartford and Hartford Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Hartford and Hartford Municipal
The main advantage of trading using opposite The Hartford and Hartford Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, Hartford 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 Hartford Municipal will offset losses from the drop in Hartford Municipal's long position.| The Hartford vs. The Hartford Capital | The Hartford vs. The Hartford Midcap | The Hartford vs. The Hartford Total | The Hartford vs. The Hartford 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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