Correlation Between American Balanced and The Hartford
Can any of the company-specific risk be diversified away by investing in both American Balanced 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 American Balanced and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and The Hartford Checks, you can compare the effects of market volatilities on American Balanced 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 American Balanced with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and The Hartford.
Diversification Opportunities for American Balanced and The Hartford
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and The is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and The Hartford Checks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Checks and American Balanced 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 Balanced Fund 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 Checks has no effect on the direction of American Balanced i.e., American Balanced and The Hartford go up and down completely randomly.
Pair Corralation between American Balanced and The Hartford
Assuming the 90 days horizon American Balanced is expected to generate 1.41 times less return on investment than The Hartford. In addition to that, American Balanced is 1.19 times more volatile than The Hartford Checks. It trades about 0.24 of its total potential returns per unit of risk. The Hartford Checks is currently generating about 0.4 per unit of volatility. If you would invest 1,026 in The Hartford Checks on September 1, 2024 and sell it today you would earn a total of 37.00 from holding The Hartford Checks or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Balanced Fund vs. The Hartford Checks
Performance |
| Timeline |
| American Balanced |
| Hartford Checks |
American Balanced and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and The Hartford
The main advantage of trading using opposite American Balanced and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced 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.| American Balanced vs. Great West Real Estate | American Balanced vs. Fidelity Real Estate | American Balanced vs. Dunham Real Estate | American Balanced vs. Forum Real Estate |
| The Hartford vs. Oppenheimer International Diversified | The Hartford vs. Fidelity Advisor Diversified | The Hartford vs. Tax Managed Mid Small | The Hartford vs. Sentinel Small Pany |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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