Correlation Between Hartford Growth and Hartford Moderate

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

Diversification Opportunities for Hartford Growth and Hartford Moderate

0.47

Correlation Coefficient

Hartford Growth  Hartford Moderate

Very weak diversification

The 3 months correlation between Hartford and Hartford is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate 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 Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Hartford Growth i.e., Hartford Growth and Hartford Moderate go up and down completely randomly.

Pair Corralation between Hartford Growth and Hartford Moderate

Assuming the 90 days horizon The Hartford Growth is expected to under-perform the Hartford Moderate. In addition to that, Hartford Growth is 2.94 times more volatile than Hartford Moderate Allocation. It trades about -0.1 of its total potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.02 per unit of volatility. If you would invest  1,261  in Hartford Moderate Allocation on December 20, 2024 and sell it today you would earn a total of  6.00  from holding Hartford Moderate Allocation or generate 0.48% 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.  Hartford Moderate Allocation

Hartford Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Hartford Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hartford Moderate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Moderate Allocation are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Moderate 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 Growth and Hartford Moderate

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

The idea behind The Hartford Growth and Hartford Moderate Allocation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.