Correlation Between Madison Investors and Hartford Moderate
Can any of the company-specific risk be diversified away by investing in both Madison Investors and Hartford Moderate 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 Madison Investors and Hartford Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Investors Fund and Hartford Moderate Allocation, you can compare the effects of market volatilities on Madison Investors and Hartford Moderate 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 Madison Investors with a short position of Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Investors and Hartford Moderate.
Diversification Opportunities for Madison Investors and Hartford Moderate
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Madison and HARTFORD is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Madison Investors Fund and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate and Madison Investors 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 Madison Investors Fund are associated (or correlated) with Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Madison Investors i.e., Madison Investors and Hartford Moderate go up and down completely randomly.
Pair Corralation between Madison Investors and Hartford Moderate
Assuming the 90 days horizon Madison Investors Fund is expected to generate 2.13 times more return on investment than Hartford Moderate. However, Madison Investors is 2.13 times more volatile than Hartford Moderate Allocation. It trades about 0.13 of its potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.1 per unit of risk. If you would invest 3,066 in Madison Investors Fund on August 25, 2024 and sell it today you would earn a total of 90.00 from holding Madison Investors Fund or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Investors Fund vs. Hartford Moderate Allocation
Performance |
| Timeline |
| Madison Investors |
| Hartford Moderate |
Madison Investors and Hartford Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Investors and Hartford Moderate
The main advantage of trading using opposite Madison Investors and Hartford Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Investors position performs unexpectedly, Hartford Moderate 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 Moderate will offset losses from the drop in Hartford Moderate's long position.| Madison Investors vs. Hartford Moderate Allocation | Madison Investors vs. American Funds Retirement | Madison Investors vs. Calvert Moderate Allocation | Madison Investors vs. Blackrock Moderate Prepared |
| Hartford Moderate vs. The Hartford Growth | Hartford Moderate vs. Hartford Growth Opportunities | Hartford Moderate vs. The Hartford Growth | Hartford Moderate vs. The Hartford Growth |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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