Correlation Between Hartford Financial and Global Net

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

By analyzing existing cross correlation between The Hartford Financial and Global Net Lease, you can compare the effects of market volatilities on Hartford Financial and Global Net 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 Financial with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Financial and Global Net.

Diversification Opportunities for Hartford Financial and Global Net

-0.52

Correlation Coefficient

Hartford Financial  Global Net

Excellent diversification

The 3 months correlation between Hartford and Global is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Financial and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Hartford Financial 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 Financial are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Hartford Financial i.e., Hartford Financial and Global Net go up and down completely randomly.

Pair Corralation between Hartford Financial and Global Net

Assuming the 90 days trading horizon The Hartford Financial is expected to generate 0.37 times more return on investment than Global Net. However, The Hartford Financial is 2.69 times less risky than Global Net. It trades about 0.01 of its potential returns per unit of risk. Global Net Lease is currently generating about -0.16 per unit of risk. If you would invest  2,514  in The Hartford Financial on September 24, 2024 and sell it today you would earn a total of  3.00  from holding The Hartford Financial or generate 0.12% return on investment over 90 days.

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

The Hartford Financial  vs.  Global Net Lease

The Hartford Financial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Financial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Hartford Financial is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Global Net 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 Financial and Global Net

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

The idea behind The Hartford Financial and Global Net Lease 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.