Correlation Between Hartford Healthcare and Hartford Midcap

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

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

Diversification Opportunities for Hartford Healthcare and Hartford Midcap

-0.62

Correlation Coefficient

Hartford Healthcare  Hartford Midcap

Excellent diversification

The 3 months correlation between Hartford and Hartford is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Healthcare and The Hartford Midcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Midcap and Hartford Healthcare 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 Healthcare are associated (or correlated) with Hartford Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Midcap has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and Hartford Midcap go up and down completely randomly.

Pair Corralation between Hartford Healthcare and Hartford Midcap

Assuming the 90 days horizon The Hartford Healthcare is expected to under-perform the Hartford Midcap. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Hartford Healthcare is 1.05 times less risky than Hartford Midcap. The mutual fund trades about -0.24 of its potential returns per unit of risk. The The Hartford Midcap is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,578  in The Hartford Midcap on September 13, 2024 and sell it today you would earn a total of  93.00  from holding The Hartford Midcap or generate 3.61% return on investment over 90 days.

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

The Hartford Healthcare  vs.  The Hartford Midcap

The Hartford Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Hartford Midcap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Midcap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Hartford Healthcare and Hartford Midcap

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

The idea behind The Hartford Healthcare and The Hartford Midcap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.