Correlation Between Hartford Equity and Hartford International

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

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

Diversification Opportunities for Hartford Equity and Hartford International

0.55

Correlation Coefficient

Hartford Equity  Hartford International

Very weak 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 The Hartford Equity and The Hartford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford International and Hartford Equity 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 Equity are associated (or correlated) with Hartford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford International has no effect on the direction of Hartford Equity i.e., Hartford Equity and Hartford International go up and down completely randomly.

Pair Corralation between Hartford Equity and Hartford International

Assuming the 90 days horizon Hartford Equity is expected to generate 2.91 times less return on investment than Hartford International. But when comparing it to its historical volatility, The Hartford Equity is 1.01 times less risky than Hartford International. It trades about 0.01 of its potential returns per unit of risk. The Hartford International is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,649  in The Hartford International on October 23, 2024 and sell it today you would earn a total of  198.00  from holding The Hartford International or generate 12.01% return on investment over 90 days.

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

The Hartford Equity  vs.  The Hartford International

Hartford Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hartford International

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind The Hartford Equity and The Hartford International 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.