Correlation Between Metropolitan West and The Hartford
Can any of the company-specific risk be diversified away by investing in both Metropolitan West 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 Metropolitan West and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West Total and The Hartford Midcap, you can compare the effects of market volatilities on Metropolitan West 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 Metropolitan West with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and The Hartford.
Diversification Opportunities for Metropolitan West and The Hartford
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Metropolitan and The is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Total and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap and Metropolitan West 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 Metropolitan West Total 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 Midcap has no effect on the direction of Metropolitan West i.e., Metropolitan West and The Hartford go up and down completely randomly.
Pair Corralation between Metropolitan West and The Hartford
Assuming the 90 days horizon Metropolitan West is expected to generate 10.53 times less return on investment than The Hartford. But when comparing it to its historical volatility, Metropolitan West Total is 2.62 times less risky than The Hartford. It trades about 0.09 of its potential returns per unit of risk. The Hartford Midcap is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 2,837 in The Hartford Midcap on August 29, 2024 and sell it today you would earn a total of 243.00 from holding The Hartford Midcap or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West Total vs. The Hartford Midcap
Performance |
| Timeline |
| Metropolitan West Total |
| Hartford Midcap |
Metropolitan West and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and The Hartford
The main advantage of trading using opposite Metropolitan West and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West 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.| Metropolitan West vs. Europacific Growth Fund | Metropolitan West vs. Templeton Global Bond | Metropolitan West vs. Mfs Value Fund | Metropolitan West vs. Mfs Emerging Markets |
| The Hartford vs. T Rowe Price | The Hartford vs. T Rowe Price | The Hartford vs. T Rowe Price | The Hartford vs. Midcap Fund Class |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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