Correlation Between The Hartford and Sentinel Mon

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

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

Diversification Opportunities for The Hartford and Sentinel Mon

0.44

Correlation Coefficient

The Hartford  Sentinel Mon

Very weak diversification

The 3 months correlation between THE and Sentinel is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Floating and Sentinel Mon Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentinel Mon Stock and The Hartford 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 Floating are associated (or correlated) with Sentinel Mon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentinel Mon Stock has no effect on the direction of The Hartford i.e., The Hartford and Sentinel Mon go up and down completely randomly.

Pair Corralation between The Hartford and Sentinel Mon

Assuming the 90 days horizon The Hartford Floating is expected to generate 0.15 times more return on investment than Sentinel Mon. However, The Hartford Floating is 6.52 times less risky than Sentinel Mon. It trades about 0.04 of its potential returns per unit of risk. Sentinel Mon Stock is currently generating about -0.07 per unit of risk. If you would invest  775.00  in The Hartford Floating on December 29, 2024 and sell it today you would earn a total of  3.00  from holding The Hartford Floating or generate 0.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

The Hartford Floating  vs.  Sentinel Mon Stock

Hartford Floating

Risk-Adjusted Performance

Insignificant

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

Sentinel Mon Stock

Risk-Adjusted Performance

Very Weak

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

Pair Trading with The Hartford and Sentinel Mon

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

The idea behind The Hartford Floating and Sentinel Mon Stock 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.