Correlation Between Dow 2x and The Hartford
Can any of the company-specific risk be diversified away by investing in both Dow 2x 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 Dow 2x and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and The Hartford Balanced, you can compare the effects of market volatilities on Dow 2x 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 Dow 2x with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and The Hartford.
Diversification Opportunities for Dow 2x and The Hartford
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dow and The is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and The Hartford Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Balanced and Dow 2x 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 Dow 2x Strategy 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 Balanced has no effect on the direction of Dow 2x i.e., Dow 2x and The Hartford go up and down completely randomly.
Pair Corralation between Dow 2x and The Hartford
Assuming the 90 days horizon Dow 2x Strategy is expected to under-perform the The Hartford. In addition to that, Dow 2x is 4.35 times more volatile than The Hartford Balanced. It trades about -0.29 of its total potential returns per unit of risk. The Hartford Balanced is currently generating about -0.33 per unit of volatility. If you would invest 1,941 in The Hartford Balanced on October 11, 2024 and sell it today you would lose (52.00) from holding The Hartford Balanced or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow 2x Strategy vs. The Hartford Balanced
Performance |
| Timeline |
| Dow 2x Strategy |
| Hartford Balanced |
Dow 2x and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and The Hartford
The main advantage of trading using opposite Dow 2x and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x 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.| Dow 2x vs. Sp 500 2x | Dow 2x vs. Inverse Dow 2x | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Russell 2000 2x |
| The Hartford vs. Mid Cap 15x Strategy | The Hartford vs. Virtus Multi Strategy Target | The Hartford vs. Dow 2x Strategy | The Hartford vs. Black Oak Emerging |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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