Correlation Between Fmasx and Hartford Midcap

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

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

Diversification Opportunities for Fmasx and Hartford Midcap

0.91

Correlation Coefficient

Fmasx  Hartford Midcap

Almost no diversification

The 3 months correlation between Fmasx and Hartford is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Fmasx and Hartford Midcap Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap Hls and Fmasx 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 Fmasx are associated (or correlated) with Hartford Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Midcap Hls has no effect on the direction of Fmasx i.e., Fmasx and Hartford Midcap go up and down completely randomly.

Pair Corralation between Fmasx and Hartford Midcap

Assuming the 90 days horizon Fmasx is expected to generate 0.88 times more return on investment than Hartford Midcap. However, Fmasx is 1.13 times less risky than Hartford Midcap. It trades about -0.09 of its potential returns per unit of risk. Hartford Midcap Hls is currently generating about -0.1 per unit of risk. If you would invest  1,506  in Fmasx on December 21, 2024 and sell it today you would lose (102.00) from holding Fmasx or give up 6.77% of portfolio value over 90 days.

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

Fmasx  vs.  Hartford Midcap Hls

Fmasx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fmasx 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.

Hartford Midcap Hls

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Midcap Hls has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Fmasx and Hartford Midcap

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

The idea behind Fmasx and Hartford Midcap Hls 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.