Correlation Between Equatorial Energia and Hartford Financial

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

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

Diversification Opportunities for Equatorial Energia and Hartford Financial

0.45

Correlation Coefficient

Equatorial Energia  Hartford Financial

Very weak diversification

The 3 months correlation between Equatorial and Hartford is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Equatorial Energia SA and The Hartford Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Hartford Financial and Equatorial Energia 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 Equatorial Energia SA are associated (or correlated) with Hartford Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Hartford Financial has no effect on the direction of Equatorial Energia i.e., Equatorial Energia and Hartford Financial go up and down completely randomly.

Pair Corralation between Equatorial Energia and Hartford Financial

Assuming the 90 days trading horizon Equatorial Energia SA is expected to generate 24.57 times more return on investment than Hartford Financial. However, Equatorial Energia is 24.57 times more volatile than The Hartford Financial. It trades about 0.18 of its potential returns per unit of risk. The Hartford Financial is currently generating about 0.13 per unit of risk. If you would invest  3,140  in Equatorial Energia SA on March 24, 2025 and sell it today you would earn a total of  453.00  from holding Equatorial Energia SA or generate 14.43% return on investment over 90 days.

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

Equatorial Energia SA  vs.  The Hartford Financial

Equatorial Energia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equatorial Energia SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Equatorial Energia unveiled solid returns over the last few months and may actually be approaching a breakup point.

The Hartford Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, Hartford Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Equatorial Energia and Hartford Financial

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

The idea behind Equatorial Energia SA and The Hartford Financial 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.