Correlation Between Clipper Fund and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both Clipper Fund and Hennessy Cornerstone 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 Clipper Fund and Hennessy Cornerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clipper Fund Inc and Hennessy Nerstone Growth, you can compare the effects of market volatilities on Clipper Fund and Hennessy Cornerstone 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 Clipper Fund with a short position of Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clipper Fund and Hennessy Cornerstone.
Diversification Opportunities for Clipper Fund and Hennessy Cornerstone
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CLIPPER and Hennessy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Clipper Fund Inc and Hennessy Nerstone Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Growth and Clipper Fund 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 Clipper Fund Inc are associated (or correlated) with Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Growth has no effect on the direction of Clipper Fund i.e., Clipper Fund and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between Clipper Fund and Hennessy Cornerstone
Assuming the 90 days horizon Clipper Fund is expected to generate 1.73 times less return on investment than Hennessy Cornerstone. But when comparing it to its historical volatility, Clipper Fund Inc is 1.1 times less risky than Hennessy Cornerstone. It trades about 0.19 of its potential returns per unit of risk. Hennessy Nerstone Growth is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,581 in Hennessy Nerstone Growth on August 30, 2024 and sell it today you would earn a total of 308.00 from holding Hennessy Nerstone Growth or generate 8.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clipper Fund Inc vs. Hennessy Nerstone Growth
Performance |
| Timeline |
| Clipper Fund |
| Hennessy Nerstone Growth |
Clipper Fund and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clipper Fund and Hennessy Cornerstone
The main advantage of trading using opposite Clipper Fund and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clipper Fund position performs unexpectedly, Hennessy Cornerstone 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 Cornerstone will offset losses from the drop in Hennessy Cornerstone's long position.| Clipper Fund vs. Value Fund Value | Clipper Fund vs. Meridian Trarian Fund | Clipper Fund vs. Longleaf Partners Fund | Clipper Fund vs. Mairs Power Growth |
| Hennessy Cornerstone vs. Hennessy Nerstone Value | Hennessy Cornerstone vs. The Jensen Portfolio | Hennessy Cornerstone vs. Meridian Trarian Fund | Hennessy Cornerstone vs. Clipper Fund Inc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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