Correlation Between Hartford Midcap and Harbor Mid
Can any of the company-specific risk be diversified away by investing in both Hartford Midcap and Harbor Mid 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 Midcap and Harbor Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Midcap and Harbor Mid Cap, you can compare the effects of market volatilities on Hartford Midcap and Harbor Mid 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 Midcap with a short position of Harbor Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Midcap and Harbor Mid.
Diversification Opportunities for Hartford Midcap and Harbor Mid
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hartford and Harbor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Midcap and Harbor Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Mid Cap and Hartford Midcap 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 The Hartford Midcap are associated (or correlated) with Harbor Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Mid Cap has no effect on the direction of Hartford Midcap i.e., Hartford Midcap and Harbor Mid go up and down completely randomly.
Pair Corralation between Hartford Midcap and Harbor Mid
Assuming the 90 days horizon The Hartford Midcap is expected to under-perform the Harbor Mid. In addition to that, Hartford Midcap is 1.09 times more volatile than Harbor Mid Cap. It trades about -0.08 of its total potential returns per unit of risk. Harbor Mid Cap is currently generating about -0.06 per unit of volatility. If you would invest 2,622 in Harbor Mid Cap on January 26, 2024 and sell it today you would lose (32.00) from holding Harbor Mid Cap or give up 1.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Hartford Midcap vs. Harbor Mid Cap
Performance |
| Timeline |
| Hartford Midcap |
| Harbor Mid Cap |
Hartford Midcap and Harbor Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hartford Midcap and Harbor Mid
The main advantage of trading using opposite Hartford Midcap and Harbor Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Midcap position performs unexpectedly, Harbor Mid 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 Harbor Mid will offset losses from the drop in Harbor Mid's long position.The idea behind The Hartford Midcap and Harbor Mid Cap 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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