Correlation Between The Hartford and Hartford Core

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

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

Diversification Opportunities for The Hartford and Hartford Core

0.92

Correlation Coefficient

The Hartford  Hartford Core

Almost no diversification

The 3 months correlation between The and Hartford is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Midcap and Hartford E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford E Equity 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 Midcap are associated (or correlated) with Hartford Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford E Equity has no effect on the direction of The Hartford i.e., The Hartford and Hartford Core go up and down completely randomly.

Pair Corralation between The Hartford and Hartford Core

Assuming the 90 days horizon The Hartford is expected to generate 5.88 times less return on investment than Hartford Core. In addition to that, The Hartford is 1.29 times more volatile than Hartford E Equity. It trades about 0.01 of its total potential returns per unit of risk. Hartford E Equity is currently generating about 0.07 per unit of volatility. If you would invest  4,061  in Hartford E Equity on October 5, 2024 and sell it today you would earn a total of  1,187  from holding Hartford E Equity or generate 29.23% return on investment over 90 days.

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

The Hartford Midcap  vs.  Hartford E Equity

Hartford Midcap

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with The Hartford and Hartford Core

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

The idea behind The Hartford Midcap and Hartford E Equity 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.