Correlation Between Energy Services and Hartford Growth
Can any of the company-specific risk be diversified away by investing in both Energy Services and Hartford Growth 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 Energy Services and Hartford Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and The Hartford Growth, you can compare the effects of market volatilities on Energy Services and Hartford Growth 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 Energy Services with a short position of Hartford Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Hartford Growth.
Diversification Opportunities for Energy Services and Hartford Growth
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Energy and Hartford is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth and Energy Services 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 Energy Services Fund are associated (or correlated) with Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Energy Services i.e., Energy Services and Hartford Growth go up and down completely randomly.
Pair Corralation between Energy Services and Hartford Growth
Assuming the 90 days horizon Energy Services Fund is expected to generate 2.4 times more return on investment than Hartford Growth. However, Energy Services is 2.4 times more volatile than The Hartford Growth. It trades about 0.22 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.34 per unit of risk. If you would invest 22,294 in Energy Services Fund on September 3, 2024 and sell it today you would earn a total of 2,333 from holding Energy Services Fund or generate 10.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. The Hartford Growth
Performance |
| Timeline |
| Energy Services |
| Hartford Growth |
Energy Services and Hartford Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Hartford Growth
The main advantage of trading using opposite Energy Services and Hartford Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Hartford Growth 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 Growth will offset losses from the drop in Hartford Growth's long position.| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
| Hartford Growth vs. Fidelity Advisor Financial | Hartford Growth vs. Goldman Sachs Financial | Hartford Growth vs. Financials Ultrasector Profund | Hartford Growth vs. John Hancock Financial |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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