Correlation Between Hartford Growth and Hartford Small

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

Diversification Opportunities for Hartford Growth and Hartford Small

0.87

Correlation Coefficient

Hartford Growth  Hartford Small

Very poor diversification

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

Pair Corralation between Hartford Growth and Hartford Small

Assuming the 90 days horizon Hartford Growth is expected to generate 1.02 times less return on investment than Hartford Small. But when comparing it to its historical volatility, The Hartford Growth is 1.39 times less risky than Hartford Small. It trades about 0.23 of its potential returns per unit of risk. Hartford Small Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,227  in Hartford Small Cap on September 12, 2024 and sell it today you would earn a total of  181.00  from holding Hartford Small Cap or generate 14.75% 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 Small Cap

Hartford Growth

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Hartford Small Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Small Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Hartford Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hartford Growth and Hartford Small

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

The idea behind The Hartford Growth and Hartford Small 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.