Correlation Between The Hartford and Hartford Small

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

Diversification Opportunities for The Hartford and Hartford Small

0.97

Correlation Coefficient

The Hartford  Hartford Small

Almost no diversification

The 3 months correlation between The and Hartford is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Midcap and Hartford Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small Pany 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small Pany has no effect on the direction of The Hartford i.e., The Hartford and Hartford Small go up and down completely randomly.

Pair Corralation between The Hartford and Hartford Small

Assuming the 90 days horizon The Hartford Midcap is expected to generate 0.8 times more return on investment than Hartford Small. However, The Hartford Midcap is 1.25 times less risky than Hartford Small. It trades about 0.23 of its potential returns per unit of risk. Hartford Small Pany is currently generating about 0.17 per unit of risk. If you would invest  2,705  in The Hartford Midcap on September 3, 2024 and sell it today you would earn a total of  371.00  from holding The Hartford Midcap or generate 13.72% 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 Small Pany

Hartford Midcap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Midcap are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, The Hartford showed solid returns over the last few months and may actually be approaching a breakup point.

Hartford Small Pany

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Small Pany are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with The Hartford and Hartford Small

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

The idea behind The Hartford Midcap and Hartford Small Pany 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.