Correlation Between The Hartford and Fidelity Mega

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

By analyzing existing cross correlation between The Hartford Small and Fidelity Mega Cap, you can compare the effects of market volatilities on The Hartford and Fidelity Mega 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 Fidelity Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and Fidelity Mega.

Diversification Opportunities for The Hartford and Fidelity Mega

0.92

Correlation Coefficient

The Hartford  Fidelity Mega

Almost no diversification

The 3 months correlation between The and Fidelity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Small and Fidelity Mega Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Mega Cap 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 Small are associated (or correlated) with Fidelity Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Mega Cap has no effect on the direction of The Hartford i.e., The Hartford and Fidelity Mega go up and down completely randomly.

Pair Corralation between The Hartford and Fidelity Mega

Assuming the 90 days horizon The Hartford Small is expected to generate 2.04 times more return on investment than Fidelity Mega. However, The Hartford is 2.04 times more volatile than Fidelity Mega Cap. It trades about 0.27 of its potential returns per unit of risk. Fidelity Mega Cap is currently generating about 0.33 per unit of risk. If you would invest  2,903  in The Hartford Small on September 5, 2024 and sell it today you would earn a total of  243.00  from holding The Hartford Small or generate 8.37% 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 Small  vs.  Fidelity Mega Cap

Hartford Small

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, The Hartford may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fidelity Mega Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Mega Cap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Fidelity Mega may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with The Hartford and Fidelity Mega

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

The idea behind The Hartford Small and Fidelity Mega 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.