Correlation Between Hartford Midcap and Hartford Growth

Can any of the company-specific risk be diversified away by investing in both Hartford Midcap and Hartford 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 Midcap and Hartford Growth 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 The Hartford Growth, you can compare the effects of market volatilities on Hartford Midcap and Hartford 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 Midcap with a short position of Hartford Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Midcap and Hartford Growth.

Diversification Opportunities for Hartford Midcap and Hartford Growth

0.48

Correlation Coefficient

Hartford Midcap  Hartford Growth

Very weak diversification

The 3 months correlation between Hartford and Hartford is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Midcap and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth and Hartford Midcap 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Hartford Midcap i.e., Hartford Midcap and Hartford Growth go up and down completely randomly.

Pair Corralation between Hartford Midcap and Hartford Growth

Assuming the 90 days horizon Hartford Midcap is expected to generate 4.1 times less return on investment than Hartford Growth. But when comparing it to its historical volatility, The Hartford Midcap is 1.14 times less risky than Hartford Growth. It trades about 0.04 of its potential returns per unit of risk. The Hartford Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,435  in The Hartford Growth on September 23, 2024 and sell it today you would earn a total of  2,297  from holding The Hartford Growth or generate 51.79% return on investment over 90 days.

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

The Hartford Midcap  vs.  The Hartford Growth

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, Hartford Midcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hartford Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hartford Midcap and Hartford Growth

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

The idea behind The Hartford Midcap and The Hartford Growth 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.