Correlation Between Hartford Longevity and IShares Small

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

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

Diversification Opportunities for Hartford Longevity and IShares Small

0.94

Correlation Coefficient

Hartford Longevity  IShares Small

Almost no diversification

The 3 months correlation between Hartford and IShares is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Longevity Economy and iShares Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Small Cap and Hartford Longevity 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 Longevity Economy are associated (or correlated) with IShares Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Small Cap has no effect on the direction of Hartford Longevity i.e., Hartford Longevity and IShares Small go up and down completely randomly.

Pair Corralation between Hartford Longevity and IShares Small

Given the investment horizon of 90 days Hartford Longevity Economy is expected to generate 0.88 times more return on investment than IShares Small. However, Hartford Longevity Economy is 1.14 times less risky than IShares Small. It trades about -0.08 of its potential returns per unit of risk. iShares Small Cap is currently generating about -0.1 per unit of risk. If you would invest  3,127  in Hartford Longevity Economy on December 29, 2024 and sell it today you would lose (158.00) from holding Hartford Longevity Economy or give up 5.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Hartford Longevity Economy  vs.  iShares Small Cap

Hartford Longevity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Longevity Economy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hartford Longevity is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Etf's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the ETF venture institutional investors.

Pair Trading with Hartford Longevity and IShares Small

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

The idea behind Hartford Longevity Economy and iShares Small Cap 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.