Correlation Between Hartford Core and Hartford Small

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

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

Diversification Opportunities for Hartford Core and Hartford Small

0.62

Correlation Coefficient

Hartford Core  Hartford Small

Poor diversification

The 3 months correlation between Hartford and Hartford is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hartford E Equity and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small and Hartford Core 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 Hartford E Equity are associated (or correlated) with Hartford Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Hartford Core i.e., Hartford Core and Hartford Small go up and down completely randomly.

Pair Corralation between Hartford Core and Hartford Small

Assuming the 90 days horizon Hartford E Equity is expected to under-perform the Hartford Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hartford E Equity is 1.06 times less risky than Hartford Small. The mutual fund trades about -0.06 of its potential returns per unit of risk. The The Hartford Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,995  in The Hartford Small on October 5, 2024 and sell it today you would earn a total of  30.00  from holding The Hartford Small or generate 1.5% return on investment over 90 days.

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

Hartford E Equity  vs.  The Hartford Small

Hartford E Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hartford Small

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Small are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hartford Core and Hartford Small

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

The idea behind Hartford E Equity and The Hartford Small 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.