Correlation Between Hartford Growth and Hartford Environmental

Can any of the company-specific risk be diversified away by investing in both Hartford Growth and Hartford Environmental 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 Hartford Environmental 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 Hartford Environmental Opportunities, you can compare the effects of market volatilities on Hartford Growth and Hartford Environmental 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 Hartford Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Growth and Hartford Environmental.

Diversification Opportunities for Hartford Growth and Hartford Environmental

0.85

Correlation Coefficient

Hartford Growth  Hartford Environmental

Very poor diversification

The 3 months correlation between Hartford and Hartford is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and Hartford Environmental Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Environmental 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 Hartford Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Environmental has no effect on the direction of Hartford Growth i.e., Hartford Growth and Hartford Environmental go up and down completely randomly.

Pair Corralation between Hartford Growth and Hartford Environmental

Assuming the 90 days horizon The Hartford Growth is expected to under-perform the Hartford Environmental. In addition to that, Hartford Growth is 1.66 times more volatile than Hartford Environmental Opportunities. It trades about -0.02 of its total potential returns per unit of risk. Hartford Environmental Opportunities is currently generating about 0.03 per unit of volatility. If you would invest  1,602  in Hartford Environmental Opportunities on February 4, 2024 and sell it today you would earn a total of  8.00  from holding Hartford Environmental Opportunities or generate 0.5% return on investment over 90 days.

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

The Hartford Growth  vs.  Hartford Environmental Opportu

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 Environmental

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Environmental Opportunities are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Environmental may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Hartford Growth and Hartford Environmental

The main advantage of trading using opposite Hartford Growth and Hartford Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Growth position performs unexpectedly, Hartford Environmental 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 Hartford Environmental will offset losses from the drop in Hartford Environmental's long position.

The idea behind The Hartford Growth and Hartford Environmental Opportunities 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.

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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.