Correlation Between Bmo In and The Hartford

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

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

Diversification Opportunities for Bmo In and The Hartford

0.79

Correlation Coefficient

Bmo In  The Hartford

Poor diversification

The 3 months correlation between Bmo and The is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bmo In Retirement Fund and The Hartford Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Healthcare and Bmo In 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 Bmo In Retirement Fund 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 The Hartford Healthcare has no effect on the direction of Bmo In i.e., Bmo In and The Hartford go up and down completely randomly.

Pair Corralation between Bmo In and The Hartford

Assuming the 90 days horizon Bmo In Retirement Fund is expected to generate 0.48 times more return on investment than The Hartford. However, Bmo In Retirement Fund is 2.1 times less risky than The Hartford. It trades about -0.45 of its potential returns per unit of risk. The Hartford Healthcare is currently generating about -0.27 per unit of risk. If you would invest  938.00  in Bmo In Retirement Fund on October 9, 2024 and sell it today you would lose (31.00) from holding Bmo In Retirement Fund or give up 3.3% of portfolio value over 90 days.

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

Bmo In Retirement Fund  vs.  The Hartford Healthcare

Bmo In Retirement

Risk-Adjusted Performance

0 of 100

Very Weak

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

The Hartford Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Healthcare 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.

Pair Trading with Bmo In and The Hartford

The main advantage of trading using opposite Bmo In and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bmo In 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 Bmo In Retirement Fund and The Hartford Healthcare 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.