Correlation Between Western Asset and Hartford Growth
Can any of the company-specific risk be diversified away by investing in both Western Asset and Hartford Growth 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 Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and The Hartford Growth, you can compare the effects of market volatilities on Western Asset and Hartford Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Hartford Growth.
Diversification Opportunities for Western Asset and Hartford Growth
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Hartford is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth 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 High are associated (or correlated) with Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Western Asset i.e., Western Asset and Hartford Growth go up and down completely randomly.
Pair Corralation between Western Asset and Hartford Growth
Assuming the 90 days horizon Western Asset is expected to generate 15.5 times less return on investment than Hartford Growth. But when comparing it to its historical volatility, Western Asset High is 7.32 times less risky than Hartford Growth. It trades about 0.15 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 5,408 in The Hartford Growth on September 5, 2024 and sell it today you would earn a total of 363.00 from holding The Hartford Growth or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. The Hartford Growth
Performance |
| Timeline |
| Western Asset High |
| Hartford Growth |
Western Asset and Hartford Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Hartford Growth
The main advantage of trading using opposite Western Asset and Hartford Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Hartford Growth 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 Growth will offset losses from the drop in Hartford Growth's long position.| Western Asset vs. Virtus Convertible | Western Asset vs. Absolute Convertible Arbitrage | Western Asset vs. Fidelity Sai Convertible | Western Asset vs. Calamos Dynamic Convertible |
| Hartford Growth vs. Pioneer High Yield | Hartford Growth vs. Western Asset High | Hartford Growth vs. Needham Aggressive Growth | Hartford Growth vs. Gmo High Yield |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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