Correlation Between The Hartford and Vela International

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

Diversification Opportunities for The Hartford and Vela International

0.83

Correlation Coefficient

The Hartford  Vela International

Very poor diversification

The 3 months correlation between The and Vela is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Healthcare and Vela International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vela International 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 Healthcare are associated (or correlated) with Vela International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vela International has no effect on the direction of The Hartford i.e., The Hartford and Vela International go up and down completely randomly.

Pair Corralation between The Hartford and Vela International

Assuming the 90 days horizon The Hartford is expected to generate 1.08 times less return on investment than Vela International. In addition to that, The Hartford is 1.2 times more volatile than Vela International. It trades about 0.1 of its total potential returns per unit of risk. Vela International is currently generating about 0.13 per unit of volatility. If you would invest  1,292  in Vela International on October 26, 2024 and sell it today you would earn a total of  22.00  from holding Vela International or generate 1.7% return on investment over 90 days.

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

The Hartford Healthcare  vs.  Vela International

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 latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Vela International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vela International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vela International 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 Vela International

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

The idea behind The Hartford Healthcare and Vela International 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.