Correlation Between Mid Cap and The Hartford

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

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

Diversification Opportunities for Mid Cap and The Hartford

0.64

Correlation Coefficient

Mid Cap  The Hartford

Poor diversification

The 3 months correlation between Mid and The is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Value and The Hartford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Interna and Mid Cap 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 Mid Cap Value 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 Interna has no effect on the direction of Mid Cap i.e., Mid Cap and The Hartford go up and down completely randomly.

Pair Corralation between Mid Cap and The Hartford

Assuming the 90 days horizon Mid Cap Value is expected to under-perform the The Hartford. In addition to that, Mid Cap is 1.67 times more volatile than The Hartford International. It trades about -0.09 of its total potential returns per unit of risk. The Hartford International is currently generating about -0.02 per unit of volatility. If you would invest  1,909  in The Hartford International on October 23, 2024 and sell it today you would lose (19.00) from holding The Hartford International or give up 1.0% of portfolio value over 90 days.

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

Mid Cap Value  vs.  The Hartford International

Mid Cap Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hartford Interna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mid Cap and The Hartford

The main advantage of trading using opposite Mid Cap and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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 Mid Cap Value and The Hartford International 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 Transaction History module to view history of all your transactions and understand their impact on performance.