Correlation Between Foreign Bond and Hartford World
Can any of the company-specific risk be diversified away by investing in both Foreign Bond and Hartford World 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 Foreign Bond and Hartford World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Bond Fund and The Hartford World, you can compare the effects of market volatilities on Foreign Bond and Hartford World 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 Foreign Bond with a short position of Hartford World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Bond and Hartford World.
Diversification Opportunities for Foreign Bond and Hartford World
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Foreign and Hartford is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Bond Fund and The Hartford World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford World and Foreign Bond 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 Foreign Bond Fund are associated (or correlated) with Hartford World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford World has no effect on the direction of Foreign Bond i.e., Foreign Bond and Hartford World go up and down completely randomly.
Pair Corralation between Foreign Bond and Hartford World
Assuming the 90 days horizon Foreign Bond Fund is expected to under-perform the Hartford World. In addition to that, Foreign Bond is 1.01 times more volatile than The Hartford World. It trades about -0.33 of its total potential returns per unit of risk. The Hartford World is currently generating about -0.14 per unit of volatility. If you would invest 973.00 in The Hartford World on January 18, 2024 and sell it today you would lose (9.00) from holding The Hartford World or give up 0.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foreign Bond Fund vs. The Hartford World
Performance |
| Timeline |
| Foreign Bond |
| Hartford World |
Foreign Bond and Hartford World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Bond and Hartford World
The main advantage of trading using opposite Foreign Bond and Hartford World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Bond position performs unexpectedly, Hartford World 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 World will offset losses from the drop in Hartford World's long position.| Foreign Bond vs. Pimco Rae Worldwide | Foreign Bond vs. Pimco Rae Worldwide | Foreign Bond vs. Pimco Rae Worldwide | Foreign Bond vs. Pimco Rae Worldwide |
| Hartford World vs. The Hartford Growth | Hartford World vs. The Hartford Growth | Hartford World vs. The Hartford Growth | Hartford World vs. The Hartford Growth |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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