Correlation Between American Funds and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Hennessy Cornerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2050 and Hennessy Nerstone Mid, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Hennessy Cornerstone.
Diversification Opportunities for American Funds and Hennessy Cornerstone
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Hennessy is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2050 and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid and American Funds 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 American Funds 2050 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 Mid has no effect on the direction of American Funds i.e., American Funds and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between American Funds and Hennessy Cornerstone
Assuming the 90 days horizon American Funds 2050 is expected to generate 0.47 times more return on investment than Hennessy Cornerstone. However, American Funds 2050 is 2.15 times less risky than Hennessy Cornerstone. It trades about 0.09 of its potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about 0.04 per unit of risk. If you would invest 1,632 in American Funds 2050 on November 27, 2024 and sell it today you would earn a total of 503.00 from holding American Funds 2050 or generate 30.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2050 vs. Hennessy Nerstone Mid
Performance |
| Timeline |
| American Funds 2050 |
| Hennessy Nerstone Mid |
American Funds and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Hennessy Cornerstone
The main advantage of trading using opposite American Funds and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Stone Ridge Diversified | American Funds vs. Principal Lifetime Hybrid | American Funds vs. Harbor Diversified International | American Funds vs. Fidelity Advisor Diversified |
| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Small Company Stock Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |