Correlation Between American Funds and The Hartford
Can any of the company-specific risk be diversified away by investing in both American Funds and The Hartford 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 American Funds and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Income and The Hartford Balanced, you can compare the effects of market volatilities on American Funds and The Hartford 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 American Funds with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and The Hartford.
Diversification Opportunities for American Funds and The Hartford
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and The is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Income and The Hartford Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Balanced and American Funds 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 American Funds Income are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Balanced has no effect on the direction of American Funds i.e., American Funds and The Hartford go up and down completely randomly.
Pair Corralation between American Funds and The Hartford
Assuming the 90 days horizon American Funds is expected to generate 1.42 times less return on investment than The Hartford. But when comparing it to its historical volatility, American Funds Income is 1.13 times less risky than The Hartford. It trades about 0.09 of its potential returns per unit of risk. The Hartford Balanced is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,483 in The Hartford Balanced on August 28, 2024 and sell it today you would earn a total of 14.00 from holding The Hartford Balanced or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Income vs. The Hartford Balanced
Performance |
| Timeline |
| American Funds Income |
| Hartford Balanced |
American Funds and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and The Hartford
The main advantage of trading using opposite American Funds and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| American Funds vs. American Funds Growth | American Funds vs. American Funds Balanced | American Funds vs. American Funds Global | American Funds vs. American Funds Growth |
| The Hartford vs. Artisan High Income | The Hartford vs. Morningstar Defensive Bond | The Hartford vs. Alliancebernstein National Municipal | The Hartford vs. Dws 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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