Correlation Between Vanguard Russell and Hartford Large

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

By analyzing existing cross correlation between Vanguard Russell 1000 and Hartford Large Cap, you can compare the effects of market volatilities on Vanguard Russell and Hartford Large 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 Vanguard Russell with a short position of Hartford Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Russell and Hartford Large.

Diversification Opportunities for Vanguard Russell and Hartford Large

0.99

Correlation Coefficient

Vanguard Russell  Hartford Large

No risk reduction

The 3 months correlation between Vanguard and Hartford is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Russell 1000 and Hartford Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Large Cap and Vanguard Russell 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 Vanguard Russell 1000 are associated (or correlated) with Hartford Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Large Cap has no effect on the direction of Vanguard Russell i.e., Vanguard Russell and Hartford Large go up and down completely randomly.

Pair Corralation between Vanguard Russell and Hartford Large

Given the investment horizon of 90 days Vanguard Russell is expected to generate 1.2 times less return on investment than Hartford Large. But when comparing it to its historical volatility, Vanguard Russell 1000 is 1.11 times less risky than Hartford Large. It trades about 0.13 of its potential returns per unit of risk. Hartford Large Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,101  in Hartford Large Cap on August 30, 2024 and sell it today you would earn a total of  211.00  from holding Hartford Large Cap or generate 10.04% return on investment over 90 days.

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

Vanguard Russell 1000  vs.  Hartford Large Cap

Vanguard Russell 1000

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Russell 1000 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Vanguard Russell may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hartford Large Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Large Cap are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile technical and fundamental indicators, Hartford Large may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Vanguard Russell and Hartford Large

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

The idea behind Vanguard Russell 1000 and Hartford Large 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.