Correlation Between IShares Russell and Hartford Total

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

By analyzing existing cross correlation between iShares Russell 2500 and Hartford Total Return, you can compare the effects of market volatilities on IShares Russell 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 IShares Russell with a short position of Hartford Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Russell and Hartford Total.

Diversification Opportunities for IShares Russell and Hartford Total

0.39

Correlation Coefficient

IShares Russell  Hartford Total

Weak diversification

The 3 months correlation between IShares and Hartford is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding iShares Russell 2500 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 IShares Russell 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 iShares Russell 2500 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 IShares Russell i.e., IShares Russell and Hartford Total go up and down completely randomly.

Pair Corralation between IShares Russell and Hartford Total

Given the investment horizon of 90 days iShares Russell 2500 is expected to under-perform the Hartford Total. In addition to that, IShares Russell is 2.33 times more volatile than Hartford Total Return. It trades about -0.28 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

iShares Russell 2500  vs.  Hartford Total Return

iShares Russell 2500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Russell 2500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, IShares Russell is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

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.

Pair Trading with IShares Russell and Hartford Total

The main advantage of trading using opposite IShares Russell and Hartford Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Russell 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.

The idea behind iShares Russell 2500 and Hartford Total Return 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.