Correlation Between Dimensional Retirement and Hartford Small

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

By analyzing existing cross correlation between Dimensional Retirement Income and Hartford Small Pany, you can compare the effects of market volatilities on Dimensional Retirement 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 Dimensional Retirement with a short position of Hartford Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Retirement and Hartford Small.

Diversification Opportunities for Dimensional Retirement and Hartford Small

0.46

Correlation Coefficient

Dimensional Retirement  Hartford Small

Very weak diversification

The 3 months correlation between Dimensional and Hartford is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Retirement Income and Hartford Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small Pany and Dimensional Retirement 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 Dimensional Retirement Income 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 Pany has no effect on the direction of Dimensional Retirement i.e., Dimensional Retirement and Hartford Small go up and down completely randomly.

Pair Corralation between Dimensional Retirement and Hartford Small

Assuming the 90 days horizon Dimensional Retirement is expected to generate 13.42 times less return on investment than Hartford Small. But when comparing it to its historical volatility, Dimensional Retirement Income is 5.77 times less risky than Hartford Small. It trades about 0.06 of its potential returns per unit of risk. Hartford Small Pany is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,741  in Hartford Small Pany on September 13, 2024 and sell it today you would earn a total of  164.00  from holding Hartford Small Pany or generate 9.42% return on investment over 90 days.

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

Dimensional Retirement Income  vs.  Hartford Small Pany

Dimensional Retirement

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Retirement Income are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dimensional Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Small Pany

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Small Pany are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dimensional Retirement and Hartford Small

The main advantage of trading using opposite Dimensional Retirement and Hartford Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Retirement 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 Dimensional Retirement Income and Hartford Small Pany 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.