Correlation Between Western Asset and The Hartford
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and The Hartford Inflation, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and The Hartford.
Diversification Opportunities for Western Asset and The Hartford
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and The is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and The Hartford Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Inflation 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 Inflation 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 The Hartford Inflation has no effect on the direction of Western Asset i.e., Western Asset and The Hartford go up and down completely randomly.
Pair Corralation between Western Asset and The Hartford
Assuming the 90 days horizon Western Asset Inflation is expected to generate 1.82 times more return on investment than The Hartford. However, Western Asset is 1.82 times more volatile than The Hartford Inflation. It trades about 0.02 of its potential returns per unit of risk. The Hartford Inflation is currently generating about 0.03 per unit of risk. If you would invest 935.00 in Western Asset Inflation on August 29, 2024 and sell it today you would earn a total of 1.00 from holding Western Asset Inflation or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. The Hartford Inflation
Performance |
| Timeline |
| Western Asset Inflation |
| The Hartford Inflation |
Western Asset and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and The Hartford
The main advantage of trading using opposite Western Asset and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Inflation Protected Securities | Western Asset vs. American Funds Inflation | Western Asset vs. HUMANA INC | Western Asset vs. Aquagold International |
| The Hartford vs. Vanguard Inflation Protected Securities | The Hartford vs. American Funds Inflation | The Hartford vs. HUMANA INC | The Hartford 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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