Correlation Between Frontier Mfg and The Hartford

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

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

Diversification Opportunities for Frontier Mfg and The Hartford

0.94

Correlation Coefficient

Frontier Mfg  The Hartford

Almost no diversification

The 3 months correlation between Frontier and The is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Mfg E and The Hartford Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Balanced and Frontier Mfg 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 Frontier Mfg E 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 Balanced has no effect on the direction of Frontier Mfg i.e., Frontier Mfg and The Hartford go up and down completely randomly.

Pair Corralation between Frontier Mfg and The Hartford

Assuming the 90 days horizon Frontier Mfg E is expected to under-perform the The Hartford. In addition to that, Frontier Mfg is 2.45 times more volatile than The Hartford Balanced. It trades about -0.02 of its total potential returns per unit of risk. The Hartford Balanced is currently generating about 0.03 per unit of volatility. If you would invest  1,317  in The Hartford Balanced on October 21, 2024 and sell it today you would earn a total of  93.00  from holding The Hartford Balanced or generate 7.06% return on investment over 90 days.

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

Frontier Mfg E  vs.  The Hartford Balanced

Frontier Mfg E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontier Mfg E has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Hartford Balanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental 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 Frontier Mfg and The Hartford

The main advantage of trading using opposite Frontier Mfg and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontier Mfg 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 Frontier Mfg E and The Hartford Balanced 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.