Correlation Between SPDR SP and Hartford Longevity

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

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

Diversification Opportunities for SPDR SP and Hartford Longevity

0.68

Correlation Coefficient

SPDR SP  Hartford Longevity

Poor diversification

The 3 months correlation between SPDR and Hartford is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SP MIDCAP and Hartford Longevity Economy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Longevity and SPDR SP 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 SPDR SP MIDCAP are associated (or correlated) with Hartford Longevity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Longevity has no effect on the direction of SPDR SP i.e., SPDR SP and Hartford Longevity go up and down completely randomly.

Pair Corralation between SPDR SP and Hartford Longevity

Considering the 90-day investment horizon SPDR SP MIDCAP is expected to under-perform the Hartford Longevity. In addition to that, SPDR SP is 1.17 times more volatile than Hartford Longevity Economy. It trades about -0.15 of its total potential returns per unit of risk. Hartford Longevity Economy is currently generating about -0.05 per unit of volatility. If you would invest  3,283  in Hartford Longevity Economy on November 28, 2024 and sell it today you would lose (80.00) from holding Hartford Longevity Economy or give up 2.44% of portfolio value over 90 days.

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

SPDR SP MIDCAP  vs.  Hartford Longevity Economy

SPDR SP MIDCAP

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPDR SP MIDCAP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Hartford Longevity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Longevity Economy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hartford Longevity is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with SPDR SP and Hartford Longevity

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

The idea behind SPDR SP MIDCAP and Hartford Longevity Economy 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.