Correlation Between Western Asset and Hartford Moderate
Can any of the company-specific risk be diversified away by investing in both Western Asset and Hartford Moderate 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 Western Asset and Hartford Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset E and Hartford Moderate Allocation, you can compare the effects of market volatilities on Western Asset and Hartford Moderate 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 Western Asset with a short position of Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Hartford Moderate.
Diversification Opportunities for Western Asset and Hartford Moderate
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and HARTFORD is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate and Western Asset 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 Western Asset E are associated (or correlated) with Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Western Asset i.e., Western Asset and Hartford Moderate go up and down completely randomly.
Pair Corralation between Western Asset and Hartford Moderate
Assuming the 90 days horizon Western Asset is expected to generate 4.46 times less return on investment than Hartford Moderate. But when comparing it to its historical volatility, Western Asset E is 1.13 times less risky than Hartford Moderate. It trades about 0.02 of its potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,084 in Hartford Moderate Allocation on August 30, 2024 and sell it today you would earn a total of 256.00 from holding Hartford Moderate Allocation or generate 23.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset E vs. Hartford Moderate Allocation
Performance |
| Timeline |
| Western Asset E |
| Hartford Moderate |
Western Asset and Hartford Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Hartford Moderate
The main advantage of trading using opposite Western Asset and Hartford Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Hartford Moderate 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 Moderate will offset losses from the drop in Hartford Moderate's long position.| Western Asset vs. Hartford Moderate Allocation | Western Asset vs. Enhanced Large Pany | Western Asset vs. Aqr Large Cap | Western Asset vs. Washington Mutual Investors |
| Hartford Moderate vs. American Balanced Fund | Hartford Moderate vs. American Balanced Fund | Hartford Moderate vs. HUMANA INC | Hartford Moderate vs. Aquagold International |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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