Correlation Between Hartford Dividend and Western Asset

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

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

Diversification Opportunities for Hartford Dividend and Western Asset

0.74

Correlation Coefficient

Hartford Dividend  Western Asset

Poor diversification

The 3 months correlation between Hartford and Western is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Dividend and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E and Hartford Dividend 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 Dividend are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Hartford Dividend i.e., Hartford Dividend and Western Asset go up and down completely randomly.

Pair Corralation between Hartford Dividend and Western Asset

Assuming the 90 days horizon The Hartford Dividend is expected to under-perform the Western Asset. In addition to that, Hartford Dividend is 3.42 times more volatile than Western Asset E. It trades about -0.11 of its total potential returns per unit of risk. Western Asset E is currently generating about -0.03 per unit of volatility. If you would invest  914.00  in Western Asset E on October 23, 2024 and sell it today you would lose (7.00) from holding Western Asset E or give up 0.77% of portfolio value over 90 days.

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

The Hartford Dividend  vs.  Western Asset E

Hartford Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Western Asset E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Western Asset 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 Dividend and Western Asset

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

The idea behind The Hartford Dividend and Western Asset E 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.