Correlation Between MicroSectors FANG and Hartford Total
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Hartford 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 MicroSectors FANG and Hartford Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG Index and Hartford Total Return, you can compare the effects of market volatilities on MicroSectors FANG and Hartford 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 MicroSectors FANG with a short position of Hartford Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Hartford Total.
Diversification Opportunities for MicroSectors FANG and Hartford Total
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MicroSectors and Hartford is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index and Hartford Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Total Return and MicroSectors FANG 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 MicroSectors FANG Index are associated (or correlated) with Hartford Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Total Return has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Hartford Total go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Hartford Total
Given the investment horizon of 90 days MicroSectors FANG Index is expected to under-perform the Hartford Total. In addition to that, MicroSectors FANG is 9.02 times more volatile than Hartford Total Return. It trades about -0.27 of its total potential returns per unit of risk. Hartford Total Return is currently generating about -0.22 per unit of volatility. If you would invest 3,355 in Hartford Total Return on January 20, 2024 and sell it today you would lose (69.00) from holding Hartford Total Return or give up 2.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
MicroSectors FANG Index vs. Hartford Total Return
Performance |
| Timeline |
| MicroSectors FANG Index |
| Hartford Total Return |
MicroSectors FANG and Hartford Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Hartford Total
The main advantage of trading using opposite MicroSectors FANG and Hartford Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Hartford 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 Hartford Total will offset losses from the drop in Hartford Total's long position.| MicroSectors FANG vs. Direxion Daily Semiconductor | MicroSectors FANG vs. MicroSectors Solactive FANG | MicroSectors FANG vs. MicroSectors FANG Index | MicroSectors FANG vs. Direxion Daily Technology |
| Hartford Total vs. SPDR SSGA Sector | Hartford Total vs. SPDR DoubleLine Emerging | Hartford Total vs. SPDR DoubleLine Short | Hartford Total vs. SPDR SSgA Ultra |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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