Correlation Between Small Cap and The Hartford
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and The Hartford Balanced, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and The Hartford.
Diversification Opportunities for Small Cap and The Hartford
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and The is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and The Hartford Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Balanced and Small Cap 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 Small Cap Stock 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 Small Cap i.e., Small Cap and The Hartford go up and down completely randomly.
Pair Corralation between Small Cap and The Hartford
Assuming the 90 days horizon Small Cap Stock is expected to generate 2.79 times more return on investment than The Hartford. However, Small Cap is 2.79 times more volatile than The Hartford Balanced. It trades about 0.04 of its potential returns per unit of risk. The Hartford Balanced is currently generating about 0.05 per unit of risk. If you would invest 1,236 in Small Cap Stock on September 2, 2024 and sell it today you would earn a total of 293.00 from holding Small Cap Stock or generate 23.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. The Hartford Balanced
Performance |
| Timeline |
| Small Cap Stock |
| Hartford Balanced |
Small Cap and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and The Hartford
The main advantage of trading using opposite Small Cap and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. Calamos Global Equity | Small Cap vs. Cutler Equity | Small Cap vs. Us Vector Equity | Small Cap vs. Small Cap Equity |
| The Hartford vs. Lord Abbett Diversified | The Hartford vs. Fidelity Advisor Diversified | The Hartford vs. Adams Diversified Equity | The Hartford vs. Small Cap Stock |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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