Correlation Between Invesco Disciplined and Hennessy Focus
Can any of the company-specific risk be diversified away by investing in both Invesco Disciplined and Hennessy Focus 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 Invesco Disciplined and Hennessy Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Invesco Disciplined Equity and Hennessy Focus Fund, you can compare the effects of market volatilities on Invesco Disciplined and Hennessy Focus 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 Invesco Disciplined with a short position of Hennessy Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Invesco Disciplined and Hennessy Focus.
Diversification Opportunities for Invesco Disciplined and Hennessy Focus
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Invesco and Hennessy is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Disciplined Equity and Hennessy Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Focus and Invesco Disciplined 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 Invesco Disciplined Equity are associated (or correlated) with Hennessy Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Focus has no effect on the direction of Invesco Disciplined i.e., Invesco Disciplined and Hennessy Focus go up and down completely randomly.
Pair Corralation between Invesco Disciplined and Hennessy Focus
Assuming the 90 days horizon Invesco Disciplined Equity is expected to generate 0.56 times more return on investment than Hennessy Focus. However, Invesco Disciplined Equity is 1.79 times less risky than Hennessy Focus. It trades about 0.08 of its potential returns per unit of risk. Hennessy Focus Fund is currently generating about 0.03 per unit of risk. If you would invest 2,498 in Invesco Disciplined Equity on August 30, 2024 and sell it today you would earn a total of 894.00 from holding Invesco Disciplined Equity or generate 35.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Invesco Disciplined Equity vs. Hennessy Focus Fund
Performance |
| Timeline |
| Invesco Disciplined |
| Hennessy Focus |
Invesco Disciplined and Hennessy Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Invesco Disciplined and Hennessy Focus
The main advantage of trading using opposite Invesco Disciplined and Hennessy Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Disciplined position performs unexpectedly, Hennessy Focus 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 Focus will offset losses from the drop in Hennessy Focus' long position.| Invesco Disciplined vs. Matthews Pacific Tiger | Invesco Disciplined vs. At Income Opportunities | Invesco Disciplined vs. Barclays ETN Select | Invesco Disciplined vs. Jpmorgan Equity Fund |
| Hennessy Focus vs. Hennessy Nerstone Growth | Hennessy Focus vs. Hennessy Nerstone Value | Hennessy Focus vs. Hennessy Nerstone Mid | Hennessy Focus vs. Hennessy Large Cap |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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