Correlation Between SCOR PK and Hartford Midcap
Can any of the company-specific risk be diversified away by investing in both SCOR PK and Hartford Midcap 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 SCOR PK and Hartford Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCOR PK and The Hartford Midcap, you can compare the effects of market volatilities on SCOR PK and Hartford Midcap 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 SCOR PK with a short position of Hartford Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCOR PK and Hartford Midcap.
Diversification Opportunities for SCOR PK and Hartford Midcap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SCOR and Hartford is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding SCOR PK and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap and SCOR PK 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 SCOR PK are associated (or correlated) with Hartford Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Midcap has no effect on the direction of SCOR PK i.e., SCOR PK and Hartford Midcap go up and down completely randomly.
Pair Corralation between SCOR PK and Hartford Midcap
Assuming the 90 days horizon SCOR PK is expected to generate 2.1 times less return on investment than Hartford Midcap. In addition to that, SCOR PK is 2.73 times more volatile than The Hartford Midcap. It trades about 0.01 of its total potential returns per unit of risk. The Hartford Midcap is currently generating about 0.05 per unit of volatility. If you would invest 2,472 in The Hartford Midcap on September 12, 2024 and sell it today you would earn a total of 415.00 from holding The Hartford Midcap or generate 16.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.09% |
| Values | Daily Returns |
SCOR PK vs. The Hartford Midcap
Performance |
| Timeline |
| SCOR PK |
| Hartford Midcap |
SCOR PK and Hartford Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCOR PK and Hartford Midcap
The main advantage of trading using opposite SCOR PK and Hartford Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOR PK position performs unexpectedly, Hartford Midcap 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 Midcap will offset losses from the drop in Hartford Midcap's long position.The idea behind SCOR PK and The Hartford Midcap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hartford Midcap vs. T Rowe Price | Hartford Midcap vs. T Rowe Price | Hartford Midcap vs. SCOR PK | Hartford Midcap vs. Morningstar Unconstrained Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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