Correlation Between Ross Stores and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both Ross Stores and Hartford Financial 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 Ross Stores and Hartford Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and The Hartford Financial, you can compare the effects of market volatilities on Ross Stores and Hartford Financial 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 Ross Stores with a short position of Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Hartford Financial.
Diversification Opportunities for Ross Stores and Hartford Financial
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ross and Hartford is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial and Ross Stores 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 Ross Stores are associated (or correlated) with Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of Ross Stores i.e., Ross Stores and Hartford Financial go up and down completely randomly.
Pair Corralation between Ross Stores and Hartford Financial
Assuming the 90 days trading horizon Ross Stores is expected to generate 1.56 times more return on investment than Hartford Financial. However, Ross Stores is 1.56 times more volatile than The Hartford Financial. It trades about 0.07 of its potential returns per unit of risk. The Hartford Financial is currently generating about 0.07 per unit of risk. If you would invest 29,210 in Ross Stores on October 11, 2024 and sell it today you would earn a total of 16,422 from holding Ross Stores or generate 56.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 92.45% |
| Values | Daily Returns |
Ross Stores vs. The Hartford Financial
Performance |
| Timeline |
| Ross Stores |
| The Hartford Financial |
Ross Stores and Hartford Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Hartford Financial
The main advantage of trading using opposite Ross Stores and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, Hartford Financial 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 Financial will offset losses from the drop in Hartford Financial's long position.| Ross Stores vs. Prudential Financial | Ross Stores vs. Eastman Chemical | Ross Stores vs. Deutsche Bank Aktiengesellschaft | Ross Stores vs. Mitsubishi UFJ Financial |
| Hartford Financial vs. ON Semiconductor | Hartford Financial vs. Align Technology | Hartford Financial vs. The Trade Desk | Hartford Financial vs. DXC Technology |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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