Correlation Between IShares Ultra and Hartford Short

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

By analyzing existing cross correlation between iShares Ultra Short Term and Hartford Short Duration, you can compare the effects of market volatilities on IShares Ultra and Hartford Short 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 IShares Ultra with a short position of Hartford Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Ultra and Hartford Short.

Diversification Opportunities for IShares Ultra and Hartford Short

0.97

Correlation Coefficient

IShares Ultra  Hartford Short

Almost no diversification

The 3 months correlation between IShares and Hartford is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares Ultra Short Term and Hartford Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Short Duration and IShares Ultra 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 iShares Ultra Short Term are associated (or correlated) with Hartford Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Short Duration has no effect on the direction of IShares Ultra i.e., IShares Ultra and Hartford Short go up and down completely randomly.

Pair Corralation between IShares Ultra and Hartford Short

Given the investment horizon of 90 days iShares Ultra Short Term is expected to generate 0.25 times more return on investment than Hartford Short. However, iShares Ultra Short Term is 4.07 times less risky than Hartford Short. It trades about 0.65 of its potential returns per unit of risk. Hartford Short Duration is currently generating about 0.15 per unit of risk. If you would invest  5,006  in iShares Ultra Short Term on August 30, 2024 and sell it today you would earn a total of  57.00  from holding iShares Ultra Short Term or generate 1.14% return on investment over 90 days.

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

iShares Ultra Short Term  vs.  Hartford Short Duration

iShares Ultra Short

Risk-Adjusted Performance

51 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Ultra Short Term are ranked lower than 51 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, IShares Ultra is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Hartford Short Duration

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Short Duration are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hartford Short is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Ultra and Hartford Short

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

The idea behind iShares Ultra Short Term and Hartford Short Duration 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.