Correlation Between Stellar and Hartford Moderate

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

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

Diversification Opportunities for Stellar and Hartford Moderate

0.26

Correlation Coefficient

Stellar  Hartford Moderate

Modest diversification

The 3 months correlation between Stellar and HARTFORD is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Hartford Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Moderate and Stellar 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 Stellar are associated (or correlated) with Hartford Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Moderate has no effect on the direction of Stellar i.e., Stellar and Hartford Moderate go up and down completely randomly.

Pair Corralation between Stellar and Hartford Moderate

Assuming the 90 days trading horizon Stellar is expected to generate 15.85 times more return on investment than Hartford Moderate. However, Stellar is 15.85 times more volatile than Hartford Moderate Allocation. It trades about 0.11 of its potential returns per unit of risk. Hartford Moderate Allocation is currently generating about 0.11 per unit of risk. If you would invest  38.00  in Stellar on October 25, 2024 and sell it today you would earn a total of  5.00  from holding Stellar or generate 13.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Stellar  vs.  Hartford Moderate Allocation

Stellar

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hartford Moderate

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Moderate Allocation are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Hartford Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stellar and Hartford Moderate

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

The idea behind Stellar and Hartford Moderate Allocation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.