Correlation Between Hartford Growth and Hartford Small

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

Diversification Opportunities for Hartford Growth and Hartford Small

0.77

Correlation Coefficient

Hartford Growth  Hartford Small

Poor diversification

The 3 months correlation between Hartford and Hartford is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Growth and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Hartford Growth i.e., Hartford Growth and Hartford Small go up and down completely randomly.

Pair Corralation between Hartford Growth and Hartford Small

Assuming the 90 days horizon The Hartford Growth is expected to generate 1.01 times more return on investment than Hartford Small. However, Hartford Growth is 1.01 times more volatile than The Hartford Small. It trades about 0.12 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.05 per unit of risk. If you would invest  3,300  in The Hartford Growth on September 23, 2024 and sell it today you would earn a total of  3,388  from holding The Hartford Growth or generate 102.67% 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 Small

Hartford Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hartford Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind The Hartford Growth and The Hartford Small 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.