Correlation Between Pace High and The Hartford
Can any of the company-specific risk be diversified away by investing in both Pace High 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 Pace High and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and The Hartford Floating, you can compare the effects of market volatilities on Pace High 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 Pace High with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and The Hartford.
Diversification Opportunities for Pace High and The Hartford
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PACE and The is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and The Hartford Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Floating and Pace High 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 Pace High Yield 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 Floating has no effect on the direction of Pace High i.e., Pace High and The Hartford go up and down completely randomly.
Pair Corralation between Pace High and The Hartford
Assuming the 90 days horizon Pace High is expected to generate 3.33 times less return on investment than The Hartford. In addition to that, Pace High is 1.03 times more volatile than The Hartford Floating. It trades about 0.07 of its total potential returns per unit of risk. The Hartford Floating is currently generating about 0.23 per unit of volatility. If you would invest 783.00 in The Hartford Floating on August 29, 2024 and sell it today you would earn a total of 6.00 from holding The Hartford Floating or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. The Hartford Floating
Performance |
| Timeline |
| Pace High Yield |
| Hartford Floating |
Pace High and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and The Hartford
The main advantage of trading using opposite Pace High and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High 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.| Pace High vs. Prudential High Yield | Pace High vs. HUMANA INC | Pace High vs. Aquagold International | Pace High vs. Barloworld Ltd ADR |
| The Hartford vs. Vanguard High Yield Tax Exempt | The Hartford vs. Artisan High Income | The Hartford vs. Pace High Yield | The Hartford vs. Pace High Yield |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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