Correlation Between Hartford Total and SPDR DoubleLine

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

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

Diversification Opportunities for Hartford Total and SPDR DoubleLine

0.94

Correlation Coefficient

Hartford Total  SPDR DoubleLine

Almost no diversification

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

Pair Corralation between Hartford Total and SPDR DoubleLine

Given the investment horizon of 90 days Hartford Total is expected to generate 1.52 times less return on investment than SPDR DoubleLine. But when comparing it to its historical volatility, Hartford Total Return is 1.03 times less risky than SPDR DoubleLine. It trades about 0.05 of its potential returns per unit of risk. SPDR DoubleLine Total is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,984  in SPDR DoubleLine Total on December 1, 2024 and sell it today you would earn a total of  53.00  from holding SPDR DoubleLine Total or generate 1.33% return on investment over 90 days.

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

Hartford Total Return  vs.  SPDR DoubleLine Total

Hartford Total Return

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Total Return are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hartford Total is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SPDR DoubleLine Total

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPDR DoubleLine Total are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, SPDR DoubleLine is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Hartford Total and SPDR DoubleLine

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

The idea behind Hartford Total Return and SPDR DoubleLine Total 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.