Correlation Between Hartford Inflation and IShares Inflation

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

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

Diversification Opportunities for Hartford Inflation and IShares Inflation

0.77

Correlation Coefficient

Hartford Inflation  IShares Inflation

Poor diversification

The 3 months correlation between Hartford and IShares is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding The Hartford Inflation and iShares Inflation Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Inflation Hedged and Hartford Inflation 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 Hartford Inflation are associated (or correlated) with IShares Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Inflation Hedged has no effect on the direction of Hartford Inflation i.e., Hartford Inflation and IShares Inflation go up and down completely randomly.

Pair Corralation between Hartford Inflation and IShares Inflation

Assuming the 90 days horizon The Hartford Inflation is expected to generate 0.79 times more return on investment than IShares Inflation. However, The Hartford Inflation is 1.27 times less risky than IShares Inflation. It trades about -0.15 of its potential returns per unit of risk. iShares Inflation Hedged is currently generating about -0.16 per unit of risk. If you would invest  990.00  in The Hartford Inflation on January 20, 2024 and sell it today you would lose (12.00) from holding The Hartford Inflation or give up 1.21% of portfolio value over 90 days.

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

The Hartford Inflation  vs.  iShares Inflation Hedged

The Hartford Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Hartford Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hartford Inflation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Inflation Hedged

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Inflation Hedged has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, IShares Inflation is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hartford Inflation and IShares Inflation

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

The idea behind The Hartford Inflation and iShares Inflation Hedged 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.