Correlation Between Target Retirement and The Hartford
Can any of the company-specific risk be diversified away by investing in both Target Retirement 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 Target Retirement and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Target Retirement 2040 and The Hartford Capital, you can compare the effects of market volatilities on Target Retirement 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 Target Retirement with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Retirement and The Hartford.
Diversification Opportunities for Target Retirement and The Hartford
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Target and The is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Target Retirement 2040 and The Hartford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Capital and Target Retirement 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 Target Retirement 2040 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 Capital has no effect on the direction of Target Retirement i.e., Target Retirement and The Hartford go up and down completely randomly.
Pair Corralation between Target Retirement and The Hartford
Assuming the 90 days horizon Target Retirement is expected to generate 1.47 times less return on investment than The Hartford. But when comparing it to its historical volatility, Target Retirement 2040 is 1.31 times less risky than The Hartford. It trades about 0.09 of its potential returns per unit of risk. The Hartford Capital is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,420 in The Hartford Capital on September 3, 2024 and sell it today you would earn a total of 1,480 from holding The Hartford Capital or generate 43.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Target Retirement 2040 vs. The Hartford Capital
Performance |
| Timeline |
| Target Retirement 2040 |
| Hartford Capital |
Target Retirement and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Target Retirement and The Hartford
The main advantage of trading using opposite Target Retirement and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Target Retirement 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.| Target Retirement vs. Barings Active Short | Target Retirement vs. Siit Ultra Short | Target Retirement vs. Astor Longshort Fund | Target Retirement vs. Goldman Sachs Short |
| The Hartford vs. Prudential Government Money | The Hartford vs. First American Funds | The Hartford vs. Elfun Government Money | The Hartford vs. Transamerica Funds |
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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