Correlation Between Medtronic Plc and Hartford Financial

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

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

Diversification Opportunities for Medtronic Plc and Hartford Financial

-0.26

Correlation Coefficient

Medtronic Plc  Hartford Financial

Very good diversification

The 3 months correlation between Medtronic and Hartford is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Medtronic plc and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial and Medtronic Plc 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 Medtronic plc are associated (or correlated) with Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of Medtronic Plc i.e., Medtronic Plc and Hartford Financial go up and down completely randomly.

Pair Corralation between Medtronic Plc and Hartford Financial

If you would invest  24,559  in Medtronic plc on October 26, 2024 and sell it today you would earn a total of  1,961  from holding Medtronic plc or generate 7.98% return on investment over 90 days.

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

Medtronic plc  vs.  The Hartford Financial

Medtronic plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medtronic plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Medtronic Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Hartford Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Hartford Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Medtronic Plc and Hartford Financial

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

The idea behind Medtronic plc and The Hartford Financial 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.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.