Correlation Between Hartford Healthcare and Vanguard European
Can any of the company-specific risk be diversified away by investing in both Hartford Healthcare and Vanguard European 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 Vanguard European 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 Vanguard European Stock, you can compare the effects of market volatilities on Hartford Healthcare and Vanguard European 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 Vanguard European. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Healthcare and Vanguard European.
Diversification Opportunities for Hartford Healthcare and Vanguard European
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hartford and Vanguard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Healthcare Hls and Vanguard European Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard European Stock 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 Vanguard European. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard European Stock has no effect on the direction of Hartford Healthcare i.e., Hartford Healthcare and Vanguard European go up and down completely randomly.
Pair Corralation between Hartford Healthcare and Vanguard European
Assuming the 90 days horizon Hartford Healthcare is expected to generate 1.4 times less return on investment than Vanguard European. In addition to that, Hartford Healthcare is 1.09 times more volatile than Vanguard European Stock. It trades about 0.19 of its total potential returns per unit of risk. Vanguard European Stock is currently generating about 0.28 per unit of volatility. If you would invest 15,195 in Vanguard European Stock on October 25, 2024 and sell it today you would earn a total of 629.00 from holding Vanguard European Stock or generate 4.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 94.74% |
Values | Daily Returns |
Hartford Healthcare Hls vs. Vanguard European Stock
Performance |
Timeline |
Hartford Healthcare Hls |
Vanguard European Stock |
Hartford Healthcare and Vanguard European Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hartford Healthcare and Vanguard European
The main advantage of trading using opposite Hartford Healthcare and Vanguard European positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Healthcare position performs unexpectedly, Vanguard European 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 Vanguard European will offset losses from the drop in Vanguard European's long position.Hartford Healthcare vs. Oil Gas Ultrasector | Hartford Healthcare vs. Alpsalerian Energy Infrastructure | Hartford Healthcare vs. Virtus Select Mlp | Hartford Healthcare vs. Goldman Sachs Mlp |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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