Correlation Between Wilmington Diversified and Hartford Growth
Can any of the company-specific risk be diversified away by investing in both Wilmington Diversified 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 Wilmington Diversified and Hartford Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wilmington Diversified Income and The Hartford Growth, you can compare the effects of market volatilities on Wilmington Diversified 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 Wilmington Diversified with a short position of Hartford Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wilmington Diversified and Hartford Growth.
Diversification Opportunities for Wilmington Diversified and Hartford Growth
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wilmington and Hartford is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Diversified Income and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth and Wilmington Diversified 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 Wilmington Diversified Income 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 Wilmington Diversified i.e., Wilmington Diversified and Hartford Growth go up and down completely randomly.
Pair Corralation between Wilmington Diversified and Hartford Growth
Assuming the 90 days horizon Wilmington Diversified is expected to generate 2.01 times less return on investment than Hartford Growth. But when comparing it to its historical volatility, Wilmington Diversified Income is 1.82 times less risky than Hartford Growth. It trades about 0.12 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,417 in The Hartford Growth on September 15, 2024 and sell it today you would earn a total of 2,373 from holding The Hartford Growth or generate 53.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wilmington Diversified Income vs. The Hartford Growth
Performance |
| Timeline |
| Wilmington Diversified |
| Hartford Growth |
Wilmington Diversified and Hartford Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wilmington Diversified and Hartford Growth
The main advantage of trading using opposite Wilmington Diversified and Hartford Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Diversified 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.The idea behind Wilmington Diversified Income and The Hartford Growth 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.
| Hartford Growth vs. Wilmington Diversified Income | Hartford Growth vs. Allianzgi Diversified Income | Hartford Growth vs. Prudential Core Conservative | Hartford Growth vs. Tax Free Conservative Income |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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