Correlation Between California Bond and Hartford International

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

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

Diversification Opportunities for California Bond and Hartford International

0.39

Correlation Coefficient

California Bond  Hartford International

Weak diversification

The 3 months correlation between California and Hartford is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding California Bond Fund and Hartford International Opportu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford International and California Bond 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 California Bond Fund are associated (or correlated) with Hartford International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford International has no effect on the direction of California Bond i.e., California Bond and Hartford International go up and down completely randomly.

Pair Corralation between California Bond and Hartford International

Assuming the 90 days horizon California Bond is expected to generate 23.85 times less return on investment than Hartford International. But when comparing it to its historical volatility, California Bond Fund is 3.27 times less risky than Hartford International. It trades about 0.02 of its potential returns per unit of risk. Hartford International Opportunities is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,631  in Hartford International Opportunities on December 24, 2024 and sell it today you would earn a total of  124.00  from holding Hartford International Opportunities or generate 7.6% return on investment over 90 days.

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

California Bond Fund  vs.  Hartford International Opportu

California Bond

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in California Bond Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, California Bond is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford International Opportunities 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 International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with California Bond and Hartford International

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

The idea behind California Bond Fund and Hartford International Opportunities 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.