Correlation Between Hartford Growth and Hartford Capital

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

Diversification Opportunities for Hartford Growth and Hartford Capital

0.9

Correlation Coefficient

Hartford Growth  Hartford Capital

Almost no diversification

The 3 months correlation between Hartford and Hartford is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and The Hartford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Capital 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 Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Capital has no effect on the direction of Hartford Growth i.e., Hartford Growth and Hartford Capital go up and down completely randomly.

Pair Corralation between Hartford Growth and Hartford Capital

Assuming the 90 days horizon The Hartford Growth is expected to generate 0.93 times more return on investment than Hartford Capital. However, The Hartford Growth is 1.07 times less risky than Hartford Capital. It trades about 0.21 of its potential returns per unit of risk. The Hartford Capital is currently generating about 0.02 per unit of risk. If you would invest  5,181  in The Hartford Growth on September 13, 2024 and sell it today you would earn a total of  692.00  from holding The Hartford Growth or generate 13.36% return on investment over 90 days.

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

The Hartford Growth  vs.  The Hartford Capital

Hartford Growth

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 16 (%) 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 Capital

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Capital are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Capital 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 Hartford Capital

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

The idea behind The Hartford Growth and The Hartford Capital 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.