Correlation Between Firsthand Alternative and Hennessy Japan
Can any of the company-specific risk be diversified away by investing in both Firsthand Alternative and Hennessy Japan 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 Firsthand Alternative and Hennessy Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firsthand Alternative Energy and Hennessy Japan Fund, you can compare the effects of market volatilities on Firsthand Alternative and Hennessy Japan 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 Firsthand Alternative with a short position of Hennessy Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firsthand Alternative and Hennessy Japan.
Diversification Opportunities for Firsthand Alternative and Hennessy Japan
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Firsthand and Hennessy is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Firsthand Alternative Energy and Hennessy Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Japan and Firsthand Alternative 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 Firsthand Alternative Energy are associated (or correlated) with Hennessy Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Japan has no effect on the direction of Firsthand Alternative i.e., Firsthand Alternative and Hennessy Japan go up and down completely randomly.
Pair Corralation between Firsthand Alternative and Hennessy Japan
Assuming the 90 days horizon Firsthand Alternative Energy is expected to under-perform the Hennessy Japan. In addition to that, Firsthand Alternative is 1.33 times more volatile than Hennessy Japan Fund. It trades about -0.1 of its total potential returns per unit of risk. Hennessy Japan Fund is currently generating about -0.1 per unit of volatility. If you would invest 4,624 in Hennessy Japan Fund on August 31, 2024 and sell it today you would lose (223.00) from holding Hennessy Japan Fund or give up 4.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firsthand Alternative Energy vs. Hennessy Japan Fund
Performance |
| Timeline |
| Firsthand Alternative |
| Hennessy Japan |
Firsthand Alternative and Hennessy Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firsthand Alternative and Hennessy Japan
The main advantage of trading using opposite Firsthand Alternative and Hennessy Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firsthand Alternative position performs unexpectedly, Hennessy Japan 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 Japan will offset losses from the drop in Hennessy Japan's long position.| Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
| Hennessy Japan vs. Hennessy Japan Small | Hennessy Japan vs. Hennessy Japan Fund | Hennessy Japan vs. Matthews Japan Fund | Hennessy Japan vs. Matthews Japan Fund |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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