Correlation Between The Hartford and Hartford High

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

Diversification Opportunities for The Hartford and Hartford High

0.77

Correlation Coefficient

The Hartford  Hartford High

Poor diversification

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

Pair Corralation between The Hartford and Hartford High

Assuming the 90 days horizon The Hartford is expected to generate 8.21 times less return on investment than Hartford High. But when comparing it to its historical volatility, The Hartford Municipal is 1.5 times less risky than Hartford High. It trades about 0.04 of its potential returns per unit of risk. The Hartford High is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  697.00  in The Hartford High on October 22, 2024 and sell it today you would earn a total of  7.00  from holding The Hartford High or generate 1.0% return on investment over 90 days.

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

The Hartford Municipal  vs.  The Hartford High

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, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford High

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford High are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The Hartford and Hartford High

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

The idea behind The Hartford Municipal and The Hartford High 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.