Correlation Between The Hartford and New Economy
Can any of the company-specific risk be diversified away by investing in both The Hartford and New Economy 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 The Hartford and New Economy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Hartford Small and New Economy Fund, you can compare the effects of market volatilities on The Hartford and New Economy 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 The Hartford with a short position of New Economy. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Hartford and New Economy.
Diversification Opportunities for The Hartford and New Economy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between The and New is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Small and New Economy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Economy Fund and The Hartford 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 Small are associated (or correlated) with New Economy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Economy Fund has no effect on the direction of The Hartford i.e., The Hartford and New Economy go up and down completely randomly.
Pair Corralation between The Hartford and New Economy
Assuming the 90 days horizon The Hartford Small is expected to under-perform the New Economy. In addition to that, The Hartford is 1.09 times more volatile than New Economy Fund. It trades about -0.08 of its total potential returns per unit of risk. New Economy Fund is currently generating about -0.05 per unit of volatility. If you would invest 6,199 in New Economy Fund on December 27, 2024 and sell it today you would lose (264.00) from holding New Economy Fund or give up 4.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
The Hartford Small vs. New Economy Fund
Performance |
Timeline |
Hartford Small |
New Economy Fund |
The Hartford and New Economy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with The Hartford and New Economy
The main advantage of trading using opposite The Hartford and New Economy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Hartford position performs unexpectedly, New Economy 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 New Economy will offset losses from the drop in New Economy's long position.The Hartford vs. Prudential Health Sciences | The Hartford vs. Live Oak Health | The Hartford vs. Deutsche Health And | The Hartford vs. Fidelity Advisor Health |
New Economy vs. Fidelity Advisor Financial | New Economy vs. 1919 Financial Services | New Economy vs. Davis Financial Fund | New Economy vs. Angel Oak Financial |
Check out your portfolio center.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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