Correlation Between New Oriental and Hartford Financial
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and Hartford Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and The Hartford Financial, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of Hartford Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Hartford Financial.
Diversification Opportunities for New Oriental and Hartford Financial
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between New and Hartford is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education 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 New Oriental 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 New Oriental Education 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 New Oriental i.e., New Oriental and Hartford Financial go up and down completely randomly.
Pair Corralation between New Oriental and Hartford Financial
Assuming the 90 days trading horizon New Oriental Education is expected to generate 48.97 times more return on investment than Hartford Financial. However, New Oriental is 48.97 times more volatile than The Hartford Financial. It trades about 0.1 of its potential returns per unit of risk. The Hartford Financial is currently generating about 0.16 per unit of risk. If you would invest 2,344 in New Oriental Education on October 8, 2024 and sell it today you would earn a total of 254.00 from holding New Oriental Education or generate 10.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
New Oriental Education vs. The Hartford Financial
Performance |
Timeline |
New Oriental Education |
The Hartford Financial |
New Oriental and Hartford Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Oriental and Hartford Financial
The main advantage of trading using opposite New Oriental and Hartford Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.New Oriental vs. Darden Restaurants, | New Oriental vs. Chunghwa Telecom Co, | New Oriental vs. Bank of America | New Oriental vs. Charter Communications |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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