Correlation Between Hartford Financial and Alleghany
Can any of the company-specific risk be diversified away by investing in both Hartford Financial and Alleghany 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 Hartford Financial and Alleghany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Financial Services and Alleghany, you can compare the effects of market volatilities on Hartford Financial and Alleghany 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 Hartford Financial with a short position of Alleghany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Financial and Alleghany.
Diversification Opportunities for Hartford Financial and Alleghany
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartford and Alleghany is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Financial Services and Alleghany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alleghany and Hartford Financial 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 Hartford Financial Services are associated (or correlated) with Alleghany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alleghany has no effect on the direction of Hartford Financial i.e., Hartford Financial and Alleghany go up and down completely randomly.
Pair Corralation between Hartford Financial and Alleghany
Considering the 90-day investment horizon Hartford Financial Services is expected to generate 8.19 times more return on investment than Alleghany. However, Hartford Financial is 8.19 times more volatile than Alleghany. It trades about 0.06 of its potential returns per unit of risk. Alleghany is currently generating about 0.1 per unit of risk. If you would invest 6,890 in Hartford Financial Services on January 26, 2024 and sell it today you would earn a total of 3,096 from holding Hartford Financial Services or generate 44.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 23.28% |
| Values | Daily Returns |
Hartford Financial Services vs. Alleghany
Performance |
| Timeline |
| Hartford Financial |
| Alleghany |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hartford Financial and Alleghany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Financial and Alleghany
The main advantage of trading using opposite Hartford Financial and Alleghany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Financial position performs unexpectedly, Alleghany 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 Alleghany will offset losses from the drop in Alleghany's long position.| Hartford Financial vs. Kemper | Hartford Financial vs. RLI Corp | Hartford Financial vs. Global Indemnity PLC | Hartford Financial vs. Argo Group International |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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