Correlation Between Fidelity Small and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both Fidelity Small 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 Fidelity Small and Hennessy Cornerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity Small Cap and Hennessy Nerstone Mid, you can compare the effects of market volatilities on Fidelity Small 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 Fidelity Small with a short position of Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Hennessy Cornerstone.
Diversification Opportunities for Fidelity Small and Hennessy Cornerstone
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fidelity and Hennessy is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap 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 Fidelity Small 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 Fidelity Small Cap 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 Fidelity Small i.e., Fidelity Small and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between Fidelity Small and Hennessy Cornerstone
Assuming the 90 days horizon Fidelity Small is expected to generate 1.03 times less return on investment than Hennessy Cornerstone. In addition to that, Fidelity Small is 1.01 times more volatile than Hennessy Nerstone Mid. It trades about 0.08 of its total potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about 0.09 per unit of volatility. If you would invest 2,390 in Hennessy Nerstone Mid on August 24, 2024 and sell it today you would earn a total of 366.00 from holding Hennessy Nerstone Mid or generate 15.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity Small Cap vs. Hennessy Nerstone Mid
Performance |
| Timeline |
| Fidelity Small Cap |
| Hennessy Nerstone Mid |
Fidelity Small and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity Small and Hennessy Cornerstone
The main advantage of trading using opposite Fidelity Small and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity Small 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.| Fidelity Small vs. Fidelity Large Cap | Fidelity Small vs. Fidelity Small Cap | Fidelity Small vs. Fidelity Mid Cap | Fidelity Small vs. Fidelity Mid Cap |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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