Correlation Between Hartford Disciplined and Hartford Moderate

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

By analyzing existing cross correlation between Hartford Disciplined Equity and Hartford Moderate Allocation, you can compare the effects of market volatilities on Hartford Disciplined and Hartford Moderate 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 Disciplined with a short position of Hartford Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Disciplined and Hartford Moderate.

Diversification Opportunities for Hartford Disciplined and Hartford Moderate

0.66

Correlation Coefficient

Hartford Disciplined  Hartford Moderate

Poor diversification

The 3 months correlation between Hartford and Hartford is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Disciplined Equity and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate and Hartford Disciplined 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 Disciplined Equity are associated (or correlated) with Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Hartford Disciplined i.e., Hartford Disciplined and Hartford Moderate go up and down completely randomly.

Pair Corralation between Hartford Disciplined and Hartford Moderate

Assuming the 90 days horizon Hartford Disciplined Equity is expected to under-perform the Hartford Moderate. In addition to that, Hartford Disciplined is 1.64 times more volatile than Hartford Moderate Allocation. It trades about -0.09 of its total potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.01 per unit of volatility. If you would invest  1,265  in Hartford Moderate Allocation on December 23, 2024 and sell it today you would earn a total of  4.00  from holding Hartford Moderate Allocation or generate 0.32% return on investment over 90 days.

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

Hartford Disciplined Equity  vs.  Hartford Moderate Allocation

Hartford Disciplined

Risk-Adjusted Performance

Very Weak

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

Hartford Moderate

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Hartford Disciplined Equity and Hartford Moderate Allocation 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.