Correlation Between De Grey and Hartford Financial

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

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

Diversification Opportunities for De Grey and Hartford Financial

-0.08

Correlation Coefficient

De Grey  Hartford Financial

Good diversification

The 3 months correlation between DGD and Hartford is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial and De Grey 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 De Grey Mining are associated (or correlated) with Hartford Financial. 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 Financial has no effect on the direction of De Grey i.e., De Grey and Hartford Financial go up and down completely randomly.

Pair Corralation between De Grey and Hartford Financial

Assuming the 90 days trading horizon De Grey Mining is expected to generate 2.68 times more return on investment than Hartford Financial. However, De Grey is 2.68 times more volatile than The Hartford Financial. It trades about 0.14 of its potential returns per unit of risk. The Hartford Financial is currently generating about 0.02 per unit of risk. If you would invest  86.00  in De Grey Mining on October 26, 2024 and sell it today you would earn a total of  31.00  from holding De Grey Mining or generate 36.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

De Grey Mining  vs.  The Hartford Financial

De Grey Mining

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Grey Mining are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, De Grey unveiled solid returns over the last few months and may actually be approaching a breakup point.

The Hartford Financial

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Financial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hartford Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with De Grey and Hartford Financial

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

The idea behind De Grey Mining and The Hartford Financial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.