Correlation Between American Funds and Hartford Small
Can any of the company-specific risk be diversified away by investing in both American Funds and Hartford Small 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 American Funds and Hartford Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and The Hartford Small, you can compare the effects of market volatilities on American Funds and Hartford Small 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 American Funds with a short position of Hartford Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Hartford Small.
Diversification Opportunities for American Funds and Hartford Small
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Hartford is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small and American Funds 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 American Funds Retirement are associated (or correlated) with Hartford Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of American Funds i.e., American Funds and Hartford Small go up and down completely randomly.
Pair Corralation between American Funds and Hartford Small
Assuming the 90 days horizon American Funds is expected to generate 1.85 times less return on investment than Hartford Small. But when comparing it to its historical volatility, American Funds Retirement is 2.87 times less risky than Hartford Small. It trades about 0.08 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,641 in The Hartford Small on August 26, 2024 and sell it today you would earn a total of 516.00 from holding The Hartford Small or generate 31.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. The Hartford Small
Performance |
| Timeline |
| American Funds Retirement |
| Hartford Small |
American Funds and Hartford Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Hartford Small
The main advantage of trading using opposite American Funds and Hartford Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Hartford Small 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 Small will offset losses from the drop in Hartford Small's long position.| American Funds vs. Goldman Sachs Large | American Funds vs. Aqr Large Cap | American Funds vs. Siit Large Cap | American Funds vs. Old Westbury Large |
| Hartford Small vs. Tortoise Energy Independence | Hartford Small vs. Firsthand Alternative Energy | Hartford Small vs. Icon Natural Resources | Hartford Small vs. Hennessy Bp Energy |
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.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |