Correlation Between Alphacentric Lifesci and Hartford Growth

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

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

Diversification Opportunities for Alphacentric Lifesci and Hartford Growth

0.05

Correlation Coefficient

Alphacentric Lifesci  Hartford Growth

Significant diversification

The 3 months correlation between Alphacentric and Hartford is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Lifesci Healthcar and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth and Alphacentric Lifesci 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 Alphacentric Lifesci Healthcare are associated (or correlated) with Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Alphacentric Lifesci i.e., Alphacentric Lifesci and Hartford Growth go up and down completely randomly.

Pair Corralation between Alphacentric Lifesci and Hartford Growth

Assuming the 90 days horizon Alphacentric Lifesci Healthcare is expected to under-perform the Hartford Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Alphacentric Lifesci Healthcare is 1.83 times less risky than Hartford Growth. The mutual fund trades about -0.04 of its potential returns per unit of risk. The The Hartford Growth is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  6,638  in The Hartford Growth on November 28, 2024 and sell it today you would lose (86.00) from holding The Hartford Growth or give up 1.3% of portfolio value over 90 days.

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

Alphacentric Lifesci Healthcar  vs.  The Hartford Growth

Alphacentric Lifesci

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphacentric Lifesci Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Alphacentric Lifesci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Growth

Risk-Adjusted Performance

Weak

Over the last 90 days The Hartford Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Hartford Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphacentric Lifesci and Hartford Growth

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

The idea behind Alphacentric Lifesci Healthcare and The Hartford Growth 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.