Correlation Between Buffalo Flexible and Hennessy Focus
Can any of the company-specific risk be diversified away by investing in both Buffalo Flexible 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 Buffalo Flexible and Hennessy Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buffalo Flexible Income and Hennessy Focus Fund, you can compare the effects of market volatilities on Buffalo Flexible 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 Buffalo Flexible with a short position of Hennessy Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo Flexible and Hennessy Focus.
Diversification Opportunities for Buffalo Flexible and Hennessy Focus
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Buffalo and Hennessy is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo Flexible Income and Hennessy Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Focus and Buffalo Flexible 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 Buffalo Flexible Income 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 Buffalo Flexible i.e., Buffalo Flexible and Hennessy Focus go up and down completely randomly.
Pair Corralation between Buffalo Flexible and Hennessy Focus
Assuming the 90 days horizon Buffalo Flexible is expected to generate 1.17 times less return on investment than Hennessy Focus. But when comparing it to its historical volatility, Buffalo Flexible Income is 1.9 times less risky than Hennessy Focus. It trades about 0.27 of its potential returns per unit of risk. Hennessy Focus Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,132 in Hennessy Focus Fund on August 31, 2024 and sell it today you would earn a total of 198.00 from holding Hennessy Focus Fund or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buffalo Flexible Income vs. Hennessy Focus Fund
Performance |
| Timeline |
| Buffalo Flexible Income |
| Hennessy Focus |
Buffalo Flexible and Hennessy Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buffalo Flexible and Hennessy Focus
The main advantage of trading using opposite Buffalo Flexible and Hennessy Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo Flexible 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.| Buffalo Flexible vs. Villere Balanced Fund | Buffalo Flexible vs. Buffalo High Yield | Buffalo Flexible vs. Buffalo Growth Fund | Buffalo Flexible vs. James Balanced Golden |
| Hennessy Focus vs. Hennessy Nerstone Mid | Hennessy Focus vs. Amg Yacktman Focused | Hennessy Focus vs. Parnassus Endeavor Fund | Hennessy Focus vs. Hennessy Small 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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