Correlation Between Hartford Global and Cotton

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

Diversification Opportunities for Hartford Global and Cotton

0.0

Correlation Coefficient

Hartford Global  Cotton

Pay attention - limited upside

The 3 months correlation between Hartford and Cotton is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Global Impact and Cotton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cotton 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 Cotton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cotton has no effect on the direction of Hartford Global i.e., Hartford Global and Cotton go up and down completely randomly.

Pair Corralation between Hartford Global and Cotton

Assuming the 90 days horizon Hartford Global Impact is expected to generate 0.84 times more return on investment than Cotton. However, Hartford Global Impact is 1.19 times less risky than Cotton. It trades about -0.01 of its potential returns per unit of risk. Cotton is currently generating about -0.03 per unit of risk. If you would invest  1,524  in Hartford Global Impact on December 30, 2024 and sell it today you would lose (10.00) from holding Hartford Global Impact or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Hartford Global Impact  vs.  Cotton

Hartford Global Impact

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Global Impact has generated negative risk-adjusted returns adding no value to fund investors. 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.

Cotton

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cotton has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cotton is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hartford Global and Cotton

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

The idea behind Hartford Global Impact and Cotton 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.