Correlation Between Hartford Balanced and Growth

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

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

Diversification Opportunities for Hartford Balanced and Growth

0.63

Correlation Coefficient

Hartford Balanced  Growth

Poor diversification

The 3 months correlation between Hartford and Growth is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Balanced and Growth And Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth And Tax and Hartford Balanced 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 The Hartford Balanced are associated (or correlated) with Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth And Tax has no effect on the direction of Hartford Balanced i.e., Hartford Balanced and Growth go up and down completely randomly.

Pair Corralation between Hartford Balanced and Growth

Assuming the 90 days horizon Hartford Balanced is expected to generate 4.2 times less return on investment than Growth. But when comparing it to its historical volatility, The Hartford Balanced is 1.07 times less risky than Growth. It trades about 0.05 of its potential returns per unit of risk. Growth And Tax is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,743  in Growth And Tax on September 12, 2024 and sell it today you would earn a total of  119.00  from holding Growth And Tax or generate 4.34% return on investment over 90 days.

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

The Hartford Balanced  vs.  Growth And Tax

Hartford Balanced

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Balanced are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Growth And Tax

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Growth And Tax are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Growth 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 Balanced and Growth

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

The idea behind The Hartford Balanced and Growth And Tax 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.