Correlation Between Transamerica High and Hartford Healthcare
Can any of the company-specific risk be diversified away by investing in both Transamerica High and Hartford Healthcare 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 Transamerica High and Hartford Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transamerica High Yield and Hartford Healthcare Hls, you can compare the effects of market volatilities on Transamerica High and Hartford Healthcare 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 Transamerica High with a short position of Hartford Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transamerica High and Hartford Healthcare.
Diversification Opportunities for Transamerica High and Hartford Healthcare
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Transamerica and Hartford is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica High Yield and Hartford Healthcare Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Healthcare Hls and Transamerica High 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 Transamerica High Yield are associated (or correlated) with Hartford Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Healthcare Hls has no effect on the direction of Transamerica High i.e., Transamerica High and Hartford Healthcare go up and down completely randomly.
Pair Corralation between Transamerica High and Hartford Healthcare
Assuming the 90 days horizon Transamerica High Yield is expected to generate 0.22 times more return on investment than Hartford Healthcare. However, Transamerica High Yield is 4.65 times less risky than Hartford Healthcare. It trades about -0.29 of its potential returns per unit of risk. Hartford Healthcare Hls is currently generating about -0.25 per unit of risk. If you would invest 830.00 in Transamerica High Yield on October 9, 2024 and sell it today you would lose (8.00) from holding Transamerica High Yield or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transamerica High Yield vs. Hartford Healthcare Hls
Performance |
| Timeline |
| Transamerica High Yield |
| Hartford Healthcare Hls |
Transamerica High and Hartford Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transamerica High and Hartford Healthcare
The main advantage of trading using opposite Transamerica High and Hartford Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica High position performs unexpectedly, Hartford Healthcare 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 Healthcare will offset losses from the drop in Hartford Healthcare's long position.The idea behind Transamerica High Yield and Hartford Healthcare Hls 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.
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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