Correlation Between Hartford Healthcare and Alps/alerian Energy

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

By analyzing existing cross correlation between Hartford Healthcare Hls and Alpsalerian Energy Infrastructure, you can compare the effects of market volatilities on Hartford Healthcare and Alps/alerian Energy 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 Healthcare with a short position of Alps/alerian Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and Alps/alerian Energy.

Diversification Opportunities for Hartford Healthcare and Alps/alerian Energy

0.57

Correlation Coefficient

Hartford Healthcare  Alps/alerian Energy

Very weak diversification

The 3 months correlation between Hartford and Alps/alerian is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls and Alpsalerian Energy Infrastruct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alps/alerian Energy and Hartford Healthcare 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 Healthcare Hls are associated (or correlated) with Alps/alerian Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alps/alerian Energy has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and Alps/alerian Energy go up and down completely randomly.

Pair Corralation between Hartford Healthcare and Alps/alerian Energy

Assuming the 90 days horizon Hartford Healthcare Hls is expected to generate 0.62 times more return on investment than Alps/alerian Energy. However, Hartford Healthcare Hls is 1.63 times less risky than Alps/alerian Energy. It trades about -0.06 of its potential returns per unit of risk. Alpsalerian Energy Infrastructure is currently generating about -0.08 per unit of risk. If you would invest  1,751  in Hartford Healthcare Hls on November 29, 2024 and sell it today you would lose (56.00) from holding Hartford Healthcare Hls or give up 3.2% of portfolio value over 90 days.

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

Hartford Healthcare Hls  vs.  Alpsalerian Energy Infrastruct

Hartford Healthcare Hls

Risk-Adjusted Performance

Very Weak

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

Alps/alerian Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpsalerian Energy Infrastructure has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Hartford Healthcare and Alps/alerian Energy

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

The idea behind Hartford Healthcare Hls and Alpsalerian Energy Infrastructure 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.