Correlation Between Hartford Growth and PHILIP

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

Diversification Opportunities for Hartford Growth and PHILIP

-0.57

Correlation Coefficient

Hartford Growth  PHILIP

Excellent diversification

The 3 months correlation between Hartford and PHILIP is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and PHILIP MORRIS INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILIP MORRIS INTL 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 PHILIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHILIP MORRIS INTL has no effect on the direction of Hartford Growth i.e., Hartford Growth and PHILIP go up and down completely randomly.

Pair Corralation between Hartford Growth and PHILIP

Assuming the 90 days horizon The Hartford Growth is expected to generate 0.66 times more return on investment than PHILIP. However, The Hartford Growth is 1.52 times less risky than PHILIP. It trades about 0.15 of its potential returns per unit of risk. PHILIP MORRIS INTL is currently generating about -0.09 per unit of risk. If you would invest  6,886  in The Hartford Growth on September 24, 2024 and sell it today you would earn a total of  762.00  from holding The Hartford Growth or generate 11.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

The Hartford Growth  vs.  PHILIP MORRIS INTL

Hartford Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PHILIP MORRIS INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHILIP MORRIS INTL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PHILIP MORRIS INTL investors.

Pair Trading with Hartford Growth and PHILIP

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

The idea behind The Hartford Growth and PHILIP MORRIS INTL 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.