Correlation Between Short Term and The Hartford

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

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

Diversification Opportunities for Short Term and The Hartford

-0.2

Correlation Coefficient

Short Term  The Hartford

Good diversification

The 3 months correlation between Short and The is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Short Term Government Fund and The Hartford International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Interna and Short Term 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 Short Term Government Fund are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Interna has no effect on the direction of Short Term i.e., Short Term and The Hartford go up and down completely randomly.

Pair Corralation between Short Term and The Hartford

Assuming the 90 days horizon Short Term is expected to generate 2.79 times less return on investment than The Hartford. But when comparing it to its historical volatility, Short Term Government Fund is 4.44 times less risky than The Hartford. It trades about 0.07 of its potential returns per unit of risk. The Hartford International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,558  in The Hartford International on October 24, 2024 and sell it today you would earn a total of  268.00  from holding The Hartford International or generate 17.2% return on investment over 90 days.

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

Short Term Government Fund  vs.  The Hartford International

Short Term Government

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Government Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Interna

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Short Term and The Hartford

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

The idea behind Short Term Government Fund and The Hartford International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.