Correlation Between Great-west Goldman and Hartford Small

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

By analyzing existing cross correlation between Great West Goldman Sachs and Hartford Small Cap, you can compare the effects of market volatilities on Great-west Goldman and Hartford Small 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 Great-west Goldman with a short position of Hartford Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-west Goldman and Hartford Small.

Diversification Opportunities for Great-west Goldman and Hartford Small

0.75

Correlation Coefficient

Great-west Goldman  Hartford Small

Poor diversification

The 3 months correlation between Great-west and Hartford is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Great West Goldman Sachs and Hartford Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small Cap and Great-west Goldman 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 Great West Goldman Sachs are associated (or correlated) with Hartford Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small Cap has no effect on the direction of Great-west Goldman i.e., Great-west Goldman and Hartford Small go up and down completely randomly.

Pair Corralation between Great-west Goldman and Hartford Small

Assuming the 90 days horizon Great West Goldman Sachs is expected to under-perform the Hartford Small. In addition to that, Great-west Goldman is 1.57 times more volatile than Hartford Small Cap. It trades about -0.11 of its total potential returns per unit of risk. Hartford Small Cap is currently generating about 0.0 per unit of volatility. If you would invest  2,961  in Hartford Small Cap on October 12, 2024 and sell it today you would lose (15.00) from holding Hartford Small Cap or give up 0.51% of portfolio value over 90 days.

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

Great West Goldman Sachs  vs.  Hartford Small Cap

Great West Goldman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Goldman Sachs has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Hartford Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Great-west Goldman and Hartford Small

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

The idea behind Great West Goldman Sachs and Hartford Small Cap 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.