Correlation Between Hartford Disciplined and Hartford Growth

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

Diversification Opportunities for Hartford Disciplined and Hartford Growth

0.84

Correlation Coefficient

Hartford Disciplined  Hartford Growth

Very poor diversification

The 3 months correlation between Hartford and Hartford is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Disciplined Equity and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth 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 Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Hartford Disciplined i.e., Hartford Disciplined and Hartford Growth go up and down completely randomly.

Pair Corralation between Hartford Disciplined and Hartford Growth

Assuming the 90 days horizon Hartford Disciplined Equity is expected to under-perform the Hartford Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hartford Disciplined Equity is 1.55 times less risky than Hartford Growth. The mutual fund trades about -0.26 of its potential returns per unit of risk. The The Hartford Growth is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  7,692  in The Hartford Growth on October 5, 2024 and sell it today you would lose (160.00) from holding The Hartford Growth or give up 2.08% of portfolio value over 90 days.

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

Hartford Disciplined Equity  vs.  The Hartford Growth

Hartford Disciplined

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Disciplined Equity are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. 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 Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hartford Disciplined and Hartford Growth

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

The idea behind Hartford Disciplined Equity and The Hartford Growth 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.