41.27 -0.05 (-0.12%) Sell

Don't go shopping for HIG now, it is underperforming the market

13 min read

HARTFORD FINANCIAL SERVICES GROUP INC performed worse than the broader market on Friday. It delivered -0.12% to close at 41.27 which is it's 52 week low, down -30% from it's 52 week high.

[Themes containing HIG]

HIG showed a strong bearish trend over the last 3 months. During this period HIG delivered -16.98% and saw a maximum drawdown of -18.95%. There were 2 short signals during this period that returned a cumulative of +13.35% to investors.


HIG has been underperforming the SP500 index in recent time. It showed significant underperformance (compared to the SP500 index) from 15 Aug, 2017 to 3 Dec, 2018. Over the last 2 years 11 months and 10 days, HIG underperformed the SP500 index on 50% days. Which indicates that on days HIG underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

HIG returned losses on 58% days in the last three months. During this time, it delivered on average -0.29% per day. It delivered it's worst daily return of -3.87%, during this period, on Wednesday, 10 Oct, 2018. The longest stort-term trend during this period was 8 losing days, which started on 29 Nov, 2018 and ended on 11 Dec, 2018. This bearish trend lost -8.21% of investor capital.

The last 12 months saw HIG's investors making profits in 3 months and incurring losses in 9 months. HIG was less consistent in delivering monthly returs than SP500 index. HIG was also a more risky investment than SP500 index as it's worst month in the last year, Feb 2018, returned -10.06% compared to -7.28% returned by SP500 index in Oct 2018. HIG had a longer winning streak of losing months than SP500 index. It went down in 5 straight months (from Aug 2018 to Dec 2018) during which period it delivered -22.63%. It is interesting to note that both HIG and SP500 index significantly outperform during months when quarterly/annual results are announced.

The hardest thing to understand in the world is the income tax.
-- Albert Einstein

HIG is currently seeing overall increase in volatility. In comparison, the SP500 index is seeing increase in volatility. During the last three months, there was a significant surge in HIG's volatility from 17 Sep, 2018 to 29 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that HIG has significant positive skewness in it's return distribution. This indicates that investors can expect HIG to recover from drawdowns quickly. Which makes HIG a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in HIG derivatives at this moment can consider 'Protective Collar' options strategy to receive better risk-adjusted returns.

SP500 index has more chance of extreme outcomes than HIG. Therefore, SP500 must receive a lower allocation than HIG in your portfolio. SP500 index usually has shorter drawdown period than HIG.

Based on your interest in HIG you may find it interesting to know that AYTU, NSPR and SBOT have all shown remarkable performance and qualify to be on every investor's watchlist.

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