Correlation Between California High and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both California High and Hennessy Technology 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 California High and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Hennessy Technology Fund, you can compare the effects of market volatilities on California High and Hennessy Technology 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 California High with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Hennessy Technology.
Diversification Opportunities for California High and Hennessy Technology
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between California and Hennessy is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and California High 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 California High Yield Municipal are associated (or correlated) with Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of California High i.e., California High and Hennessy Technology go up and down completely randomly.
Pair Corralation between California High and Hennessy Technology
Assuming the 90 days horizon California High Yield Municipal is expected to generate 0.11 times more return on investment than Hennessy Technology. However, California High Yield Municipal is 9.42 times less risky than Hennessy Technology. It trades about 0.2 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.01 per unit of risk. If you would invest 984.00 in California High Yield Municipal on September 14, 2024 and sell it today you would earn a total of 7.00 from holding California High Yield Municipal or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Hennessy Technology Fund
Performance |
| Timeline |
| California High Yield |
| Hennessy Technology |
California High and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and Hennessy Technology
The main advantage of trading using opposite California High and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Hennessy Technology 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 Technology will offset losses from the drop in Hennessy Technology's long position.| California High vs. Copeland Risk Managed | California High vs. Franklin High Income | California High vs. Intal High Relative | California High vs. Western Asset High |
| Hennessy Technology vs. Aqr Long Short Equity | Hennessy Technology vs. Shelton Emerging Markets | Hennessy Technology vs. Sp Midcap Index | Hennessy Technology vs. T Rowe Price |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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