Correlation Between Harbor Mid and Hartford Midcap

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Can any of the company-specific risk be diversified away by investing in both Harbor Mid and Hartford Midcap 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 Harbor Mid and Hartford Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Mid Cap and The Hartford Midcap, you can compare the effects of market volatilities on Harbor Mid and Hartford Midcap 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 Harbor Mid with a short position of Hartford Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Mid and Hartford Midcap.

Diversification Opportunities for Harbor Mid and Hartford Midcap

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Harbor and Hartford is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding HARBOR MID CAP and THE HARTFORD MIDCAP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Midcap and Harbor Mid 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 Harbor Mid Cap are associated (or correlated) with Hartford Midcap. 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 Midcap has no effect on the direction of Harbor Mid i.e., Harbor Mid and Hartford Midcap go up and down completely randomly.

Pair Corralation between Harbor Mid and Hartford Midcap

Assuming the 90 days horizon Harbor Mid Cap is expected to generate 0.94 times more return on investment than Hartford Midcap. However, Harbor Mid Cap is 1.06 times less risky than Hartford Midcap. It trades about 0.51 of its potential returns per unit of risk. The Hartford Midcap is currently generating about 0.26 per unit of risk. If you would invest  2,488  in Harbor Mid Cap on December 29, 2023 and sell it today you would earn a total of  181.00  from holding Harbor Mid Cap or generate 7.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.65%
ValuesDaily Returns

HARBOR MID CAP  vs.  THE HARTFORD MIDCAP

 Performance 
       Timeline  
Harbor Mid Cap 

Risk-Adjusted Performance

15 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Mid Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly fragile basic indicators, Harbor Mid may actually be approaching a critical reversion point that can send shares even higher in April 2024.
The Hartford Midcap 

Risk-Adjusted Performance

8 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Midcap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Hartford Midcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Harbor Mid and Hartford Midcap Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Harbor Mid and Hartford Midcap

The main advantage of trading using opposite Harbor Mid and Hartford Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Mid position performs unexpectedly, Hartford Midcap 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 Midcap will offset losses from the drop in Hartford Midcap's long position.
The idea behind Harbor Mid Cap and The Hartford Midcap 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.
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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