Correlation Between Hartford Total and IShares Morningstar

Can any of the company-specific risk be diversified away by investing in both Hartford Total and IShares Morningstar 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 IShares Morningstar 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 iShares Morningstar Equity, you can compare the effects of market volatilities on Hartford Total and IShares Morningstar 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 IShares Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hartford Total and IShares Morningstar.

Diversification Opportunities for Hartford Total and IShares Morningstar

0.23

Correlation Coefficient

Hartford Total  IShares Morningstar

Modest diversification

The 3 months correlation between Hartford and IShares is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Total Return and iShares Morningstar Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Morningstar 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 IShares Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Morningstar has no effect on the direction of Hartford Total i.e., Hartford Total and IShares Morningstar go up and down completely randomly.

Pair Corralation between Hartford Total and IShares Morningstar

Given the investment horizon of 90 days Hartford Total Return is expected to generate 0.53 times more return on investment than IShares Morningstar. However, Hartford Total Return is 1.9 times less risky than IShares Morningstar. It trades about -0.22 of its potential returns per unit of risk. iShares Morningstar Equity is currently generating about -0.16 per unit of risk. If you would invest  3,338  in Hartford Total Return on January 30, 2024 and sell it today you would lose (63.00) from holding Hartford Total Return or give up 1.89% of portfolio value over 90 days.

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

Hartford Total Return  vs.  iShares Morningstar Equity

Hartford Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hartford Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hartford Total is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

iShares Morningstar

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Morningstar Equity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward-looking signals, IShares Morningstar is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hartford Total and IShares Morningstar

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

The idea behind Hartford Total Return and iShares Morningstar Equity 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.