Correlation Between Ultra Short-term and The Hartford

Can any of the company-specific risk be diversified away by investing in both Ultra 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 Ultra 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 Ultra Short Term Bond and The Hartford Healthcare, you can compare the effects of market volatilities on Ultra 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 Ultra Short-term with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Short-term and The Hartford.

Diversification Opportunities for Ultra Short-term and The Hartford

0.15

Correlation Coefficient

Ultra Short-term  The Hartford

Average diversification

The 3 months correlation between Ultra and The is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Short Term Bond and The Hartford Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Healthcare and Ultra 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 Ultra Short Term Bond 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 The Hartford Healthcare has no effect on the direction of Ultra Short-term i.e., Ultra Short-term and The Hartford go up and down completely randomly.

Pair Corralation between Ultra Short-term and The Hartford

Assuming the 90 days horizon Ultra Short-term is expected to generate 1.01 times less return on investment than The Hartford. But when comparing it to its historical volatility, Ultra Short Term Bond is 7.83 times less risky than The Hartford. It trades about 0.21 of its potential returns per unit of risk. The Hartford Healthcare is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,288  in The Hartford Healthcare on December 19, 2024 and sell it today you would earn a total of  51.00  from holding The Hartford Healthcare or generate 1.19% return on investment over 90 days.

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

Ultra Short Term Bond  vs.  The Hartford Healthcare

Ultra Short Term

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Short Term Bond are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ultra Short-term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Hartford Healthcare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Healthcare are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Ultra Short-term and The Hartford

The main advantage of trading using opposite Ultra Short-term and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra 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 Ultra Short Term Bond and The Hartford Healthcare 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.