Correlation Between The Hartford and Dreyfus Municipal

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

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

Diversification Opportunities for The Hartford and Dreyfus Municipal

-0.1

Correlation Coefficient

The Hartford  Dreyfus Municipal

Good diversification

The 3 months correlation between The and Dreyfus is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Equity and Dreyfus Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Municipal Bond and The Hartford 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 Equity are associated (or correlated) with Dreyfus Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Municipal Bond has no effect on the direction of The Hartford i.e., The Hartford and Dreyfus Municipal go up and down completely randomly.

Pair Corralation between The Hartford and Dreyfus Municipal

Assuming the 90 days horizon The Hartford Equity is expected to generate 2.34 times more return on investment than Dreyfus Municipal. However, The Hartford is 2.34 times more volatile than Dreyfus Municipal Bond. It trades about 0.15 of its potential returns per unit of risk. Dreyfus Municipal Bond is currently generating about 0.07 per unit of risk. If you would invest  2,174  in The Hartford Equity on September 4, 2024 and sell it today you would earn a total of  123.00  from holding The Hartford Equity or generate 5.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

The Hartford Equity  vs.  Dreyfus Municipal Bond

Hartford Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Municipal Bond

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Municipal Bond are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Dreyfus Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Hartford and Dreyfus Municipal

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

The idea behind The Hartford Equity and Dreyfus Municipal Bond 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.