Correlation Between Ab Small and Hartford Core
Can any of the company-specific risk be diversified away by investing in both Ab Small and Hartford Core 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 Ab Small and Hartford Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Hartford E Equity, you can compare the effects of market volatilities on Ab Small and Hartford Core 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 Ab Small with a short position of Hartford Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Hartford Core.
Diversification Opportunities for Ab Small and Hartford Core
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QUAZX and Hartford is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Hartford E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford E Equity and Ab Small 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 Ab Small Cap are associated (or correlated) with Hartford Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford E Equity has no effect on the direction of Ab Small i.e., Ab Small and Hartford Core go up and down completely randomly.
Pair Corralation between Ab Small and Hartford Core
Assuming the 90 days horizon Ab Small Cap is expected to under-perform the Hartford Core. In addition to that, Ab Small is 1.65 times more volatile than Hartford E Equity. It trades about -0.47 of its total potential returns per unit of risk. Hartford E Equity is currently generating about -0.21 per unit of volatility. If you would invest 4,766 in Hartford E Equity on December 9, 2024 and sell it today you would lose (197.00) from holding Hartford E Equity or give up 4.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Hartford E Equity
Performance |
| Timeline |
| Ab Small Cap |
| Hartford E Equity |
Ab Small and Hartford Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Hartford Core
The main advantage of trading using opposite Ab Small and Hartford Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small position performs unexpectedly, Hartford Core 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 Core will offset losses from the drop in Hartford Core's long position.| Ab Small vs. Mid Cap 15x Strategy | ||
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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