Correlation Between Hartford Small and Hartford Total

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

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

Diversification Opportunities for Hartford Small and Hartford Total

-0.55

Correlation Coefficient

Hartford Small  Hartford Total

Excellent diversification

The 3 months correlation between Hartford and Hartford is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Small Cap and The Hartford Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Total and Hartford Small 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 Small Cap are associated (or correlated) with Hartford Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Total has no effect on the direction of Hartford Small i.e., Hartford Small and Hartford Total go up and down completely randomly.

Pair Corralation between Hartford Small and Hartford Total

Assuming the 90 days horizon Hartford Small Cap is expected to generate 3.96 times more return on investment than Hartford Total. However, Hartford Small is 3.96 times more volatile than The Hartford Total. It trades about 0.15 of its potential returns per unit of risk. The Hartford Total is currently generating about -0.13 per unit of risk. If you would invest  2,793  in Hartford Small Cap on September 12, 2024 and sell it today you would earn a total of  317.00  from holding Hartford Small Cap or generate 11.35% return on investment over 90 days.

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

Hartford Small Cap  vs.  The Hartford Total

Hartford Small Cap

Risk-Adjusted Performance

11 of 100

Good

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

Hartford Total

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Hartford Small Cap and The Hartford Total 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.