Correlation Between Mid Cap and Hartford Value

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and The Hartford Value, you can compare the effects of market volatilities on Mid Cap and Hartford Value 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 Mid Cap with a short position of Hartford Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Hartford Value.

Diversification Opportunities for Mid Cap and Hartford Value

-0.18

Correlation Coefficient

Mid Cap  Hartford Value

Good diversification

The 3 months correlation between Mid and Hartford is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and The Hartford Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Value and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Hartford Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Value has no effect on the direction of Mid Cap i.e., Mid Cap and Hartford Value go up and down completely randomly.

Pair Corralation between Mid Cap and Hartford Value

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 2.01 times more return on investment than Hartford Value. However, Mid Cap is 2.01 times more volatile than The Hartford Value. It trades about 0.04 of its potential returns per unit of risk. The Hartford Value is currently generating about 0.04 per unit of risk. If you would invest  10,367  in Mid Cap 15x Strategy on October 11, 2024 and sell it today you would earn a total of  2,942  from holding Mid Cap 15x Strategy or generate 28.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	25.81%
Values	Daily Returns

Mid Cap 15x Strategy  vs.  The Hartford Value

Mid Cap 15x

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mid Cap 15x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Mid Cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mid Cap and Hartford Value

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

The idea behind Mid Cap 15x Strategy and The Hartford Value 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..