Correlation Between Akre Focus and Hennessy Small
Can any of the company-specific risk be diversified away by investing in both Akre Focus and Hennessy Small 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 Akre Focus and Hennessy Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akre Focus Fund and Hennessy Small Cap, you can compare the effects of market volatilities on Akre Focus and Hennessy Small 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 Akre Focus with a short position of Hennessy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akre Focus and Hennessy Small.
Diversification Opportunities for Akre Focus and Hennessy Small
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Akre and Hennessy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Akre Focus Fund and Hennessy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Small Cap and Akre Focus 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 Akre Focus Fund are associated (or correlated) with Hennessy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Small Cap has no effect on the direction of Akre Focus i.e., Akre Focus and Hennessy Small go up and down completely randomly.
Pair Corralation between Akre Focus and Hennessy Small
Assuming the 90 days horizon Akre Focus Fund is expected to generate 0.59 times more return on investment than Hennessy Small. However, Akre Focus Fund is 1.7 times less risky than Hennessy Small. It trades about -0.01 of its potential returns per unit of risk. Hennessy Small Cap is currently generating about -0.14 per unit of risk. If you would invest 6,773 in Akre Focus Fund on November 27, 2024 and sell it today you would lose (17.00) from holding Akre Focus Fund or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akre Focus Fund vs. Hennessy Small Cap
Performance |
| Timeline |
| Akre Focus Fund |
| Hennessy Small Cap |
Akre Focus and Hennessy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akre Focus and Hennessy Small
The main advantage of trading using opposite Akre Focus and Hennessy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akre Focus position performs unexpectedly, Hennessy Small 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 Hennessy Small will offset losses from the drop in Hennessy Small's long position.| Akre Focus vs. Osterweis Strategic Income | Akre Focus vs. Doubleline Low Duration | Akre Focus vs. Doubleline Total Return | Akre Focus vs. Primecap Odyssey Growth |
| Hennessy Small vs. Hennessy Large Cap | Hennessy Small vs. Rmb Mendon Financial | Hennessy Small vs. Hennessy Focus Fund | Hennessy Small vs. Rmb Mendon Financial |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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