Correlation Between Hartford Small and Tax Managed

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

Diversification Opportunities for Hartford Small and Tax Managed

0.95

Correlation Coefficient

Hartford Small  Tax Managed

Almost no diversification

The 3 months correlation between Hartford and Tax is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Small and Tax Managed Mid Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Managed Mid 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 The Hartford Small are associated (or correlated) with Tax Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Managed Mid has no effect on the direction of Hartford Small i.e., Hartford Small and Tax Managed go up and down completely randomly.

Pair Corralation between Hartford Small and Tax Managed

Assuming the 90 days horizon The Hartford Small is expected to generate 1.06 times more return on investment than Tax Managed. However, Hartford Small is 1.06 times more volatile than Tax Managed Mid Small. It trades about 0.11 of its potential returns per unit of risk. Tax Managed Mid Small is currently generating about 0.11 per unit of risk. If you would invest  2,863  in The Hartford Small on September 14, 2024 and sell it today you would earn a total of  220.00  from holding The Hartford Small or generate 7.68% return on investment over 90 days.

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

The Hartford Small  vs.  Tax Managed Mid Small

Hartford Small

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Small are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tax Managed Mid

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tax Managed Mid Small are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Tax Managed may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hartford Small and Tax Managed

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

The idea behind The Hartford Small and Tax Managed Mid Small 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..