Correlation Between Harbor Mid and The Hartford
Can any of the company-specific risk be diversified away by investing in both Harbor Mid 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 Harbor Mid and The Hartford 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 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 Harbor Mid with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Mid and The Hartford.
Diversification Opportunities for Harbor Mid and The Hartford
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Harbor and The is 0.75. 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 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 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 Hartford Midcap has no effect on the direction of Harbor Mid i.e., Harbor Mid and The Hartford go up and down completely randomly.
Pair Corralation between Harbor Mid and The Hartford
Assuming the 90 days horizon Harbor Mid Cap is expected to generate 1.07 times more return on investment than The Hartford. However, Harbor Mid is 1.07 times more volatile than The Hartford Midcap. It trades about 0.03 of its potential returns per unit of risk. The Hartford Midcap is currently generating about 0.02 per unit of risk. If you would invest 2,213 in Harbor Mid Cap on January 24, 2024 and sell it today you would earn a total of 343.00 from holding Harbor Mid Cap or generate 15.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
Harbor Mid Cap vs. The Hartford Midcap
Performance |
Timeline |
Harbor Mid Cap |
Hartford Midcap |
Harbor Mid and The Hartford Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Harbor Mid and The Hartford
The main advantage of trading using opposite Harbor Mid and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Mid 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.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.The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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