Correlation Between Hartford Global and American Funds

Can any of the company-specific risk be diversified away by investing in both Hartford Global and American Funds 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 Global and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hartford Global Impact and American Funds Smallcap, you can compare the effects of market volatilities on Hartford Global and American Funds 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 Global with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Global and American Funds.

Diversification Opportunities for Hartford Global and American Funds

0.88

Correlation Coefficient

Hartford Global  American Funds

Very poor diversification

The 3 months correlation between Hartford and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Global Impact and American Funds Smallcap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Smallcap and Hartford Global 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 Hartford Global Impact are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Smallcap has no effect on the direction of Hartford Global i.e., Hartford Global and American Funds go up and down completely randomly.

Pair Corralation between Hartford Global and American Funds

Assuming the 90 days horizon Hartford Global is expected to generate 1.97 times less return on investment than American Funds. But when comparing it to its historical volatility, Hartford Global Impact is 1.21 times less risky than American Funds. It trades about 0.07 of its potential returns per unit of risk. American Funds Smallcap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  6,844  in American Funds Smallcap on September 12, 2024 and sell it today you would earn a total of  350.00  from holding American Funds Smallcap or generate 5.11% return on investment over 90 days.

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

Hartford Global Impact  vs.  American Funds Smallcap

Hartford Global Impact

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Global Impact are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Funds Smallcap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Smallcap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, American Funds 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 Global and American Funds

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

The idea behind Hartford Global Impact and American Funds Smallcap 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.