Correlation Between Hartford Growth and Ab Small

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

Diversification Opportunities for Hartford Growth and Ab Small

0.42

Correlation Coefficient

Hartford Growth  Ab Small

Very weak diversification

The 3 months correlation between Hartford and QUAIX is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and Ab Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Small Cap 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 Ab Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Small Cap has no effect on the direction of Hartford Growth i.e., Hartford Growth and Ab Small go up and down completely randomly.

Pair Corralation between Hartford Growth and Ab Small

Assuming the 90 days horizon The Hartford Growth is expected to generate 0.94 times more return on investment than Ab Small. However, The Hartford Growth is 1.06 times less risky than Ab Small. It trades about 0.11 of its potential returns per unit of risk. Ab Small Cap is currently generating about 0.05 per unit of risk. If you would invest  3,768  in The Hartford Growth on October 25, 2024 and sell it today you would earn a total of  3,234  from holding The Hartford Growth or generate 85.83% return on investment over 90 days.

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

The Hartford Growth  vs.  Ab Small Cap

Hartford Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Hartford Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ab Small Cap

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Ab Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hartford Growth and Ab Small

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

The idea behind The Hartford Growth and Ab Small Cap 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .