Correlation Between Blackrock Science and Hennessy Technology

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Can any of the company-specific risk be diversified away by investing in both Blackrock Science 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 Blackrock Science and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Science Technology and Hennessy Technology Fund, you can compare the effects of market volatilities on Blackrock Science 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 Blackrock Science with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Science and Hennessy Technology.

Diversification Opportunities for Blackrock Science and Hennessy Technology

BlackrockHennessyDiversified AwayBlackrockHennessyDiversified Away100%
0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Blackrock and Hennessy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Science Technology and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Blackrock Science 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 Blackrock Science Technology 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 Blackrock Science i.e., Blackrock Science and Hennessy Technology go up and down completely randomly.

Pair Corralation between Blackrock Science and Hennessy Technology

Assuming the 90 days horizon Blackrock Science Technology is expected to under-perform the Hennessy Technology. In addition to that, Blackrock Science is 1.63 times more volatile than Hennessy Technology Fund. It trades about -0.08 of its total potential returns per unit of risk. Hennessy Technology Fund is currently generating about -0.08 per unit of volatility. If you would invest  2,403  in Hennessy Technology Fund on November 25, 2024 and sell it today you would lose (52.00) from holding Hennessy Technology Fund or give up 2.16% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Blackrock Science Technology  vs.  Hennessy Technology Fund

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -4-20246
JavaScript chart by amCharts 3.21.15BGSIX HTECX
       Timeline  
Blackrock Science 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Blackrock Science Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Blackrock Science is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb73747576777879
Hennessy Technology 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Hennessy Technology Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Hennessy Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb22.52323.52424.525

Blackrock Science and Hennessy Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.76-2.07-1.38-0.68-0.010.661.352.032.723.41 0.050.100.150.20
JavaScript chart by amCharts 3.21.15BGSIX HTECX
       Returns  

Pair Trading with Blackrock Science and Hennessy Technology

The main advantage of trading using opposite Blackrock Science and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Science 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.
The idea behind Blackrock Science Technology and Hennessy Technology Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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