Correlation Between Hartford Municipal and Columbia Porate

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

By analyzing existing cross correlation between The Hartford Municipal and Columbia Porate Income, you can compare the effects of market volatilities on Hartford Municipal and Columbia Porate 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 Municipal with a short position of Columbia Porate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Municipal and Columbia Porate.

Diversification Opportunities for Hartford Municipal and Columbia Porate

0.23

Correlation Coefficient

Hartford Municipal  Columbia Porate

Modest diversification

The 3 months correlation between Hartford and Columbia is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Municipal and Columbia Porate Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Porate Income and Hartford Municipal 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 Municipal are associated (or correlated) with Columbia Porate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Porate Income has no effect on the direction of Hartford Municipal i.e., Hartford Municipal and Columbia Porate go up and down completely randomly.

Pair Corralation between Hartford Municipal and Columbia Porate

Assuming the 90 days horizon Hartford Municipal is expected to generate 1.43 times less return on investment than Columbia Porate. But when comparing it to its historical volatility, The Hartford Municipal is 2.04 times less risky than Columbia Porate. It trades about 0.08 of its potential returns per unit of risk. Columbia Porate Income is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  876.00  in Columbia Porate Income on October 5, 2024 and sell it today you would earn a total of  17.00  from holding Columbia Porate Income or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	20.04%
Values	Daily Returns

The Hartford Municipal  vs.  Columbia Porate Income

The Hartford Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Hartford Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Columbia Porate Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Porate Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Columbia Porate 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 Municipal and Columbia Porate

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

The idea behind The Hartford Municipal and Columbia Porate Income 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.