Correlation Between Vanguard and The Hartford
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 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 Sp Small Cap and The Hartford Emerging, you can compare the effects of market volatilities on Vanguard 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 with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and The Hartford.
Diversification Opportunities for Vanguard and The Hartford
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and THE is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Sp Small Cap and The Hartford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Emerging and Vanguard 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 Sp Small Cap 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 Emerging has no effect on the direction of Vanguard i.e., Vanguard and The Hartford go up and down completely randomly.
Pair Corralation between Vanguard and The Hartford
Assuming the 90 days horizon Vanguard Sp Small Cap is expected to generate 3.48 times more return on investment than The Hartford. However, Vanguard is 3.48 times more volatile than The Hartford Emerging. It trades about 0.28 of its potential returns per unit of risk. The Hartford Emerging is currently generating about -0.14 per unit of risk. If you would invest 38,414 in Vanguard Sp Small Cap on September 4, 2024 and sell it today you would earn a total of 3,875 from holding Vanguard Sp Small Cap or generate 10.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vanguard Sp Small Cap vs. The Hartford Emerging
Performance |
| Timeline |
| Vanguard Sp Small |
| Hartford Emerging |
Vanguard and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and The Hartford
The main advantage of trading using opposite Vanguard and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard vs. Vanguard Materials Index | Vanguard vs. Vanguard Limited Term Tax Exempt | Vanguard vs. Vanguard Limited Term Tax Exempt | Vanguard vs. Vanguard Global Minimum |
| The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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