Correlation Between Hartford Growth and Hartford Midcap

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

Diversification Opportunities for Hartford Growth and Hartford Midcap

0.7

Correlation Coefficient

Hartford Growth  Hartford Midcap

Poor diversification

The 3 months correlation between Hartford and Hartford is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth 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 Growth 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 Growth 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 Growth i.e., Hartford Growth and Hartford Midcap go up and down completely randomly.

Pair Corralation between Hartford Growth and Hartford Midcap

Assuming the 90 days horizon The Hartford Growth is expected to generate 1.05 times more return on investment than Hartford Midcap. However, Hartford Growth is 1.05 times more volatile than The Hartford Midcap. It trades about 0.23 of its potential returns per unit of risk. The Hartford Midcap is currently generating about 0.17 per unit of risk. If you would invest  5,262  in The Hartford Growth on September 12, 2024 and sell it today you would earn a total of  777.00  from holding The Hartford Growth or generate 14.77% return on investment over 90 days.

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

The Hartford Growth  vs.  The Hartford Midcap

Hartford Growth

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly inconsistent basic indicators, Hartford Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Hartford Midcap

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Hartford Growth and Hartford Midcap

The main advantage of trading using opposite Hartford Growth and Hartford Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Growth 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 Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.