Correlation Between Baird Short-term and The Hartford

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

By analyzing existing cross correlation between Baird Short Term Bond and The Hartford Emerging, you can compare the effects of market volatilities on Baird Short-term 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 Baird Short-term with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Short-term and The Hartford.

Diversification Opportunities for Baird Short-term and The Hartford

0.88

Correlation Coefficient

Baird Short-term  The Hartford

Very poor diversification

The 3 months correlation between Baird and The is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Baird Short Term Bond and The Hartford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Emerging and Baird Short-term 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 Baird Short Term Bond 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 Emerging has no effect on the direction of Baird Short-term i.e., Baird Short-term and The Hartford go up and down completely randomly.

Pair Corralation between Baird Short-term and The Hartford

Assuming the 90 days horizon Baird Short-term is expected to generate 3.18 times less return on investment than The Hartford. But when comparing it to its historical volatility, Baird Short Term Bond is 4.71 times less risky than The Hartford. It trades about 0.28 of its potential returns per unit of risk. The Hartford Emerging is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  418.00  in The Hartford Emerging on December 18, 2024 and sell it today you would earn a total of  20.00  from holding The Hartford Emerging or generate 4.78% return on investment over 90 days.

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

Baird Short Term Bond  vs.  The Hartford Emerging

Baird Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Baird Short Term Bond are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Baird Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Emerging are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. 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 Baird Short-term and The Hartford

The main advantage of trading using opposite Baird Short-term and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Short-term 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 Baird Short Term Bond and The Hartford Emerging 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.