Correlation Between Deutsche California and The Hartford
Can any of the company-specific risk be diversified away by investing in both Deutsche California 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 Deutsche California and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche California Tax Free and The Hartford Small, you can compare the effects of market volatilities on Deutsche California 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 Deutsche California with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche California and The Hartford.
Diversification Opportunities for Deutsche California and The Hartford
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Deutsche and The is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche California Tax Free and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small and Deutsche California 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 Deutsche California Tax Free 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 Small has no effect on the direction of Deutsche California i.e., Deutsche California and The Hartford go up and down completely randomly.
Pair Corralation between Deutsche California and The Hartford
Assuming the 90 days horizon Deutsche California is expected to generate 4.67 times less return on investment than The Hartford. But when comparing it to its historical volatility, Deutsche California Tax Free is 4.47 times less risky than The Hartford. It trades about 0.06 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,309 in The Hartford Small on August 29, 2024 and sell it today you would earn a total of 830.00 from holding The Hartford Small or generate 35.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche California Tax Free vs. The Hartford Small
Performance |
| Timeline |
| Deutsche California Tax |
| Hartford Small |
Deutsche California and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche California and The Hartford
The main advantage of trading using opposite Deutsche California and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche California 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.| Deutsche California vs. The Hartford Small | Deutsche California vs. Chartwell Small Cap | Deutsche California vs. Artisan Small Cap | Deutsche California vs. Vanguard Strategic Small Cap |
| The Hartford vs. Putnam Equity Income | The Hartford vs. Putnam Growth Opportunities | The Hartford vs. HUMANA INC | The Hartford vs. Aquagold International |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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