Correlation Between Investment and The Hartford

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

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

Diversification Opportunities for Investment and The Hartford

0.92

Correlation Coefficient

Investment  The Hartford

Almost no diversification

The 3 months correlation between Investment and The is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Investment Of America and The Hartford Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Equity and Investment 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 Investment Of America are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Equity has no effect on the direction of Investment i.e., Investment and The Hartford go up and down completely randomly.

Pair Corralation between Investment and The Hartford

Assuming the 90 days horizon Investment Of America is expected to generate 1.05 times more return on investment than The Hartford. However, Investment is 1.05 times more volatile than The Hartford Equity. It trades about 0.12 of its potential returns per unit of risk. The Hartford Equity is currently generating about 0.04 per unit of risk. If you would invest  3,959  in Investment Of America on September 4, 2024 and sell it today you would earn a total of  2,364  from holding Investment Of America or generate 59.71% return on investment over 90 days.

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

Investment Of America  vs.  The Hartford Equity

Investment Of America

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investment Of America are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hartford Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Equity are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Hartford is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investment and The Hartford

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

The idea behind Investment Of America and The Hartford Equity 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.