Correlation Between Hartford Total and IShares Core

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

Diversification Opportunities for Hartford Total and IShares Core

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hartford and IShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Total Return and IShares Core US in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares Core US and Hartford Total 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 Total Return are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares Core US has no effect on the direction of Hartford Total i.e., Hartford Total and IShares Core go up and down completely randomly.

Pair Corralation between Hartford Total and IShares Core

Given the investment horizon of 90 days Hartford Total Return is expected to generate 1.03 times more return on investment than IShares Core. However, Hartford Total is 1.03 times more volatile than IShares Core US. It trades about 0.14 of its potential returns per unit of risk. IShares Core US is currently generating about 0.12 per unit of risk. If you would invest  3,114  in Hartford Total Return on December 29, 2023 and sell it today you would earn a total of  261.00  from holding Hartford Total Return or generate 8.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.19%
ValuesDaily Returns

Hartford Total Return  vs.  IShares Core US

 Performance 
       Timeline  
Hartford Total Return 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Hartford Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hartford Total is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
IShares Core US 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days IShares Core US has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, IShares Core is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Hartford Total and IShares Core Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hartford Total and IShares Core

The main advantage of trading using opposite Hartford Total and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Total position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.
The idea behind Hartford Total Return and IShares Core US 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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