Correlation Between Hartford Small and Hartford Healthcare

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

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

Diversification Opportunities for Hartford Small and Hartford Healthcare

-0.63

Correlation Coefficient

Hartford Small  Hartford Healthcare

Excellent diversification

The 3 months correlation between Hartford and Hartford is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Small Pany and The Hartford Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Healthcare and Hartford Small 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 Hartford Small Pany are associated (or correlated) with Hartford Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Healthcare has no effect on the direction of Hartford Small i.e., Hartford Small and Hartford Healthcare go up and down completely randomly.

Pair Corralation between Hartford Small and Hartford Healthcare

Assuming the 90 days horizon Hartford Small Pany is expected to generate 1.41 times more return on investment than Hartford Healthcare. However, Hartford Small is 1.41 times more volatile than The Hartford Healthcare. It trades about 0.16 of its potential returns per unit of risk. The Hartford Healthcare is currently generating about -0.16 per unit of risk. If you would invest  1,711  in Hartford Small Pany on September 12, 2024 and sell it today you would earn a total of  194.00  from holding Hartford Small Pany or generate 11.34% return on investment over 90 days.

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

Hartford Small Pany  vs.  The Hartford Healthcare

Hartford Small Pany

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Small Pany 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 Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

The Hartford Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Hartford Small and Hartford Healthcare

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

The idea behind Hartford Small Pany and The Hartford Healthcare 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.