Correlation Between Via Renewables and Hartford Growth

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

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

Diversification Opportunities for Via Renewables and Hartford Growth

0.85

Correlation Coefficient

Via Renewables  Hartford Growth

Very poor diversification

The 3 months correlation between Via and Hartford is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth and Via Renewables 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 Via Renewables are associated (or correlated) with Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Via Renewables i.e., Via Renewables and Hartford Growth go up and down completely randomly.

Pair Corralation between Via Renewables and Hartford Growth

Assuming the 90 days horizon Via Renewables is expected to generate 1.14 times less return on investment than Hartford Growth. In addition to that, Via Renewables is 1.8 times more volatile than The Hartford Growth. It trades about 0.07 of its total potential returns per unit of risk. The Hartford Growth is currently generating about 0.14 per unit of volatility. If you would invest  4,156  in The Hartford Growth on October 1, 2024 and sell it today you would earn a total of  2,580  from holding The Hartford Growth or generate 62.08% return on investment over 90 days.

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

Via Renewables  vs.  The Hartford Growth

Via Renewables

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Hartford Growth

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Via Renewables and Hartford Growth

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

The idea behind Via Renewables and The Hartford Growth 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.