Correlation Between Government Securities and Hartford Stock

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

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

Diversification Opportunities for Government Securities and Hartford Stock

0.78

Correlation Coefficient

Government Securities  Hartford Stock

Poor diversification

The 3 months correlation between Government and Hartford is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Hartford Stock Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Stock Hls and Government Securities 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 Government Securities Fund are associated (or correlated) with Hartford Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Stock Hls has no effect on the direction of Government Securities i.e., Government Securities and Hartford Stock go up and down completely randomly.

Pair Corralation between Government Securities and Hartford Stock

Assuming the 90 days horizon Government Securities is expected to generate 2.27 times less return on investment than Hartford Stock. But when comparing it to its historical volatility, Government Securities Fund is 1.95 times less risky than Hartford Stock. It trades about 0.03 of its potential returns per unit of risk. Hartford Stock Hls is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,614  in Hartford Stock Hls on October 5, 2024 and sell it today you would earn a total of  428.00  from holding Hartford Stock Hls or generate 4.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Government Securities Fund  vs.  Hartford Stock Hls

Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hartford Stock Hls

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Government Securities and Hartford Stock

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

The idea behind Government Securities Fund and Hartford Stock Hls 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..