Correlation Between Microsoft and The Hartford
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and The Hartford Servative, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and The Hartford.
Diversification Opportunities for Microsoft and The Hartford
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Microsoft and The is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and The Hartford Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Servative and Microsoft 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 Microsoft 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 The Hartford Servative has no effect on the direction of Microsoft i.e., Microsoft and The Hartford go up and down completely randomly.
Pair Corralation between Microsoft and The Hartford
Given the investment horizon of 90 days Microsoft is expected to under-perform the The Hartford. In addition to that, Microsoft is 5.37 times more volatile than The Hartford Servative. It trades about -0.04 of its total potential returns per unit of risk. The Hartford Servative is currently generating about 0.2 per unit of volatility. If you would invest 1,142 in The Hartford Servative on August 31, 2024 and sell it today you would earn a total of 16.00 from holding The Hartford Servative or generate 1.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. The Hartford Servative
Performance |
| Timeline |
| Microsoft |
| The Hartford Servative |
Microsoft and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and The Hartford
The main advantage of trading using opposite Microsoft and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| The Hartford vs. Calvert Emerging Markets | The Hartford vs. Ep Emerging Markets | The Hartford vs. Growth Strategy Fund | The Hartford vs. Rbc Emerging Markets |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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