Correlation Between Capital Income and The Hartford
Can any of the company-specific risk be diversified away by investing in both Capital Income 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 Capital Income and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Income Builder and The Hartford Global, you can compare the effects of market volatilities on Capital Income 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 Capital Income with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and The Hartford.
Diversification Opportunities for Capital Income and The Hartford
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and The is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder and The Hartford Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Global and Capital Income 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 Capital Income Builder 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 Global has no effect on the direction of Capital Income i.e., Capital Income and The Hartford go up and down completely randomly.
Pair Corralation between Capital Income and The Hartford
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.8 times more return on investment than The Hartford. However, Capital Income Builder is 1.25 times less risky than The Hartford. It trades about -0.09 of its potential returns per unit of risk. The Hartford Global is currently generating about -0.13 per unit of risk. If you would invest 7,331 in Capital Income Builder on August 25, 2024 and sell it today you would lose (62.00) from holding Capital Income Builder or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. The Hartford Global
Performance |
| Timeline |
| Capital Income Builder |
| Hartford Global |
Capital Income and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and The Hartford
The main advantage of trading using opposite Capital Income and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income 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.| Capital Income vs. Goldman Sachs Large | Capital Income vs. Dodge Cox Stock | Capital Income vs. Fidelity Stock Selector | Capital Income vs. Fisher Large Cap |
| The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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