Correlation Between Towpath Technology and The Hartford

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

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

Diversification Opportunities for Towpath Technology and The Hartford

0.82

Correlation Coefficient

Towpath Technology  The Hartford

Very poor diversification

The 3 months correlation between Towpath and The is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Towpath Technology and The Hartford Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Capital and Towpath Technology 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 Towpath Technology are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Capital has no effect on the direction of Towpath Technology i.e., Towpath Technology and The Hartford go up and down completely randomly.

Pair Corralation between Towpath Technology and The Hartford

Assuming the 90 days horizon Towpath Technology is expected to under-perform the The Hartford. In addition to that, Towpath Technology is 1.5 times more volatile than The Hartford Capital. It trades about -0.06 of its total potential returns per unit of risk. The Hartford Capital is currently generating about 0.18 per unit of volatility. If you would invest  5,932  in The Hartford Capital on August 31, 2024 and sell it today you would earn a total of  209.00  from holding The Hartford Capital or generate 3.52% return on investment over 90 days.

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

Towpath Technology  vs.  The Hartford Capital

Towpath Technology

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Towpath Technology are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Towpath Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Capital

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Capital are ranked lower than 15 (%) 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 December 2024.

Pair Trading with Towpath Technology and The Hartford

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

The idea behind Towpath Technology and The Hartford Capital 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.