Correlation Between Vanguard Short-term and The Hartford
Can any of the company-specific risk be diversified away by investing in both Vanguard Short-term 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 Vanguard Short-term and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Short Term Investment Grade and The Hartford Short, you can compare the effects of market volatilities on Vanguard Short-term 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 Vanguard Short-term with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Short-term and The Hartford.
Diversification Opportunities for Vanguard Short-term and The Hartford
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and The is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Short Term Investment and The Hartford Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Short and Vanguard Short-term 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 Vanguard Short Term Investment Grade 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 Short has no effect on the direction of Vanguard Short-term i.e., Vanguard Short-term and The Hartford go up and down completely randomly.
Pair Corralation between Vanguard Short-term and The Hartford
Assuming the 90 days horizon Vanguard Short-term is expected to generate 1.28 times less return on investment than The Hartford. In addition to that, Vanguard Short-term is 1.39 times more volatile than The Hartford Short. It trades about 0.13 of its total potential returns per unit of risk. The Hartford Short is currently generating about 0.23 per unit of volatility. If you would invest 958.00 in The Hartford Short on August 31, 2024 and sell it today you would earn a total of 6.00 from holding The Hartford Short or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Short Term Investment vs. The Hartford Short
Performance |
| Timeline |
| Vanguard Short Term |
| Hartford Short |
Vanguard Short-term and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Short-term and The Hartford
The main advantage of trading using opposite Vanguard Short-term and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Short-term 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.The idea behind Vanguard Short Term Investment Grade and The Hartford Short 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.
| The Hartford vs. Federated Global Allocation | The Hartford vs. Dreyfusstandish Global Fixed | The Hartford vs. Ab Global Risk | The Hartford vs. Kinetics Global Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |