Correlation Between Hartford Total and ARK Innovation

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

Diversification Opportunities for Hartford Total and ARK Innovation

0.48

Correlation Coefficient

Hartford Total ARK Innovation

Very weak diversification

The 3 months correlation between Hartford and ARK Innovation is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hartford Total Return and ARK Innovation ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Innovation ETF 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 ARK Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Innovation ETF has no effect on the direction of Hartford Total i.e., Hartford Total and ARK Innovation go up and down completely randomly.

Pair Corralation between Hartford Total and ARK Innovation

Given the investment horizon of 90 days Hartford Total Return is expected to generate 0.22 times more return on investment than ARK Innovation. However, Hartford Total Return is 4.53 times less risky than ARK Innovation. It trades about 0.13 of its potential returns per unit of risk. ARK Innovation ETF is currently generating about -0.04 per unit of risk. If you would invest  3,328  in Hartford Total Return on December 27, 2022 and sell it today you would earn a total of  55.00  from holding Hartford Total Return or generate 1.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Hartford Total Return  vs.  ARK Innovation ETF

Hartford Total Return

Hartford Performance

6 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Total Return are ranked lower than 6 (%) 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 newest stock price disturbance, may contribute to short-term losses for the investors.

ARK Innovation ETF

ARK Innovation Performance

10 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Innovation ETF are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile forward-looking signals, ARK Innovation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hartford Total and ARK Innovation

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

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The idea behind Hartford Total Return and ARK Innovation ETF 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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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.