Correlation Between Hartford Growth and The Hartford

Can any of the company-specific risk be diversified away by investing in both Hartford Growth 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 Hartford Growth and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Hartford Growth and The Hartford Checks, you can compare the effects of market volatilities on Hartford Growth 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 Hartford Growth with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Growth and The Hartford.

Diversification Opportunities for Hartford Growth and The Hartford

0.85

Correlation Coefficient

Hartford Growth  The Hartford

Very poor diversification

The 3 months correlation between Hartford and The is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and The Hartford Checks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Checks and Hartford Growth 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 Growth 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 Checks has no effect on the direction of Hartford Growth i.e., Hartford Growth and The Hartford go up and down completely randomly.

Pair Corralation between Hartford Growth and The Hartford

Assuming the 90 days horizon The Hartford Growth is expected to under-perform the The Hartford. In addition to that, Hartford Growth is 2.3 times more volatile than The Hartford Checks. It trades about -0.08 of its total potential returns per unit of risk. The Hartford Checks is currently generating about -0.03 per unit of volatility. If you would invest  974.00  in The Hartford Checks on February 5, 2024 and sell it today you would lose (4.00) from holding The Hartford Checks or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

The Hartford Growth  vs.  The Hartford Checks

Hartford Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hartford Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Checks

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Checks are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hartford Growth and The Hartford

The main advantage of trading using opposite Hartford Growth and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Growth 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 The Hartford Growth and The Hartford Checks 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.