Correlation Between Hartford Total and Vanguard Total

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Can any of the company-specific risk be diversified away by investing in both Hartford Total and Vanguard Total 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 Hartford Total and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hartford Total Return and Vanguard Total Bond, you can compare the effects of market volatilities on Hartford Total and Vanguard Total 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 Hartford Total with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Total and Vanguard Total.

Diversification Opportunities for Hartford Total and Vanguard Total

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Hartford and Vanguard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Total Return and Vanguard Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Bond and Hartford Total 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 Hartford Total Return are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Bond has no effect on the direction of Hartford Total i.e., Hartford Total and Vanguard Total go up and down completely randomly.

Pair Corralation between Hartford Total and Vanguard Total

Given the investment horizon of 90 days Hartford Total Return is expected to generate 0.81 times more return on investment than Vanguard Total. However, Hartford Total Return is 1.23 times less risky than Vanguard Total. It trades about 0.25 of its potential returns per unit of risk. Vanguard Total Bond is currently generating about 0.18 per unit of risk. If you would invest  3,334  in Hartford Total Return on December 30, 2023 and sell it today you would earn a total of  40.00  from holding Hartford Total Return or generate 1.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Hartford Total Return  vs.  Vanguard Total Bond

 Performance 
       Timeline  
Hartford Total Return 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Total Return are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hartford Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Vanguard Total Bond 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Vanguard Total Bond has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Hartford Total and Vanguard Total Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hartford Total and Vanguard Total

The main advantage of trading using opposite Hartford Total and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hartford Total position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.
The idea behind Hartford Total Return and Vanguard Total Bond 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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