Correlation Between Hartford Small and Great-west Goldman

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

Diversification Opportunities for Hartford Small and Great-west Goldman

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Hartford and Great-west is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Small Cap and Great West Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Goldman 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 Great-west Goldman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Goldman has no effect on the direction of Hartford Small i.e., Hartford Small and Great-west Goldman go up and down completely randomly.

Pair Corralation between Hartford Small and Great-west Goldman

Assuming the 90 days horizon Hartford Small Cap is expected to generate 1.1 times more return on investment than Great-west Goldman. However, Hartford Small is 1.1 times more volatile than Great West Goldman Sachs. It trades about 0.05 of its potential returns per unit of risk. Great West Goldman Sachs is currently generating about 0.03 per unit of risk. If you would invest  2,285  in Hartford Small Cap on October 11, 2024 and sell it today you would earn a total of  661.00  from holding Hartford Small Cap or generate 28.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Hartford Small Cap  vs.  Great West Goldman Sachs

 Performance 
       Timeline  
Hartford Small Cap 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Hartford Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Hartford Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Great West Goldman 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Great West Goldman Sachs has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Hartford Small and Great-west Goldman Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hartford Small and Great-west Goldman

The main advantage of trading using opposite Hartford Small and Great-west Goldman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Small position performs unexpectedly, Great-west Goldman 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 Great-west Goldman will offset losses from the drop in Great-west Goldman's long position.
The idea behind Hartford Small Cap and Great West Goldman Sachs 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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