Correlation Between Wilmington Trust and Hartford Servative

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

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

Diversification Opportunities for Wilmington Trust and Hartford Servative

0.26

Correlation Coefficient

Wilmington Trust  Hartford Servative

Modest diversification

The 3 months correlation between Wilmington and Hartford is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Trust Retirement and The Hartford Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Servative and Wilmington Trust 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 Wilmington Trust Retirement are associated (or correlated) with Hartford Servative. 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 Servative has no effect on the direction of Wilmington Trust i.e., Wilmington Trust and Hartford Servative go up and down completely randomly.

Pair Corralation between Wilmington Trust and Hartford Servative

Assuming the 90 days trading horizon Wilmington Trust Retirement is expected to under-perform the Hartford Servative. In addition to that, Wilmington Trust is 2.83 times more volatile than The Hartford Servative. It trades about -0.08 of its total potential returns per unit of risk. The Hartford Servative is currently generating about 0.05 per unit of volatility. If you would invest  1,109  in The Hartford Servative on December 21, 2024 and sell it today you would earn a total of  12.00  from holding The Hartford Servative or generate 1.08% return on investment over 90 days.

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

Wilmington Trust Retirement  vs.  The Hartford Servative

Wilmington Trust Ret

Risk-Adjusted Performance

Very Weak

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

The Hartford Servative

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Wilmington Trust and Hartford Servative

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

The idea behind Wilmington Trust Retirement and The Hartford Servative 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.

Check out your portfolio center.

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.