Correlation Between Gabelli Healthcare and Hartford Healthcare

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

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

Diversification Opportunities for Gabelli Healthcare and Hartford Healthcare

0.73

Correlation Coefficient

Gabelli Healthcare  Hartford Healthcare

Poor diversification

The 3 months correlation between Gabelli and Hartford is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding The Gabelli Healthcare and Hartford Healthcare Hls in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Healthcare Hls and Gabelli Healthcare 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 The Gabelli Healthcare are associated (or correlated) with Hartford Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Healthcare Hls has no effect on the direction of Gabelli Healthcare i.e., Gabelli Healthcare and Hartford Healthcare go up and down completely randomly.

Pair Corralation between Gabelli Healthcare and Hartford Healthcare

Assuming the 90 days horizon The Gabelli Healthcare is expected to generate 1.1 times more return on investment than Hartford Healthcare. However, Gabelli Healthcare is 1.1 times more volatile than Hartford Healthcare Hls. It trades about 0.06 of its potential returns per unit of risk. Hartford Healthcare Hls is currently generating about 0.02 per unit of risk. If you would invest  1,094  in The Gabelli Healthcare on December 30, 2024 and sell it today you would earn a total of  36.00  from holding The Gabelli Healthcare or generate 3.29% return on investment over 90 days.

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

The Gabelli Healthcare  vs.  Hartford Healthcare Hls

The Gabelli Healthcare

Risk-Adjusted Performance

Insignificant

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

Hartford Healthcare Hls

Risk-Adjusted Performance

Weak

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

Pair Trading with Gabelli Healthcare and Hartford Healthcare

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

The idea behind The Gabelli Healthcare and Hartford Healthcare 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.