Correlation Between Hennessy Balanced and Hennessy Total
Can any of the company-specific risk be diversified away by investing in both Hennessy Balanced and Hennessy Total 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 Hennessy Balanced and Hennessy Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Balanced Fund and Hennessy Total Return, you can compare the effects of market volatilities on Hennessy Balanced and Hennessy Total 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 Hennessy Balanced with a short position of Hennessy Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Balanced and Hennessy Total.
Diversification Opportunities for Hennessy Balanced and Hennessy Total
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Hennessy is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Balanced Fund and Hennessy Total Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Total Return and Hennessy Balanced 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 Hennessy Balanced Fund are associated (or correlated) with Hennessy Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Total Return has no effect on the direction of Hennessy Balanced i.e., Hennessy Balanced and Hennessy Total go up and down completely randomly.
Pair Corralation between Hennessy Balanced and Hennessy Total
Assuming the 90 days horizon Hennessy Balanced is expected to generate 1.4 times less return on investment than Hennessy Total. But when comparing it to its historical volatility, Hennessy Balanced Fund is 1.38 times less risky than Hennessy Total. It trades about 0.06 of its potential returns per unit of risk. Hennessy Total Return is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,306 in Hennessy Total Return on November 3, 2024 and sell it today you would earn a total of 50.00 from holding Hennessy Total Return or generate 3.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Balanced Fund vs. Hennessy Total Return
Performance |
| Timeline |
| Hennessy Balanced |
| Hennessy Total Return |
Hennessy Balanced and Hennessy Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Balanced and Hennessy Total
The main advantage of trading using opposite Hennessy Balanced and Hennessy Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Balanced position performs unexpectedly, Hennessy Total 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 Total will offset losses from the drop in Hennessy Total's long position.| Hennessy Balanced vs. Vanguard Wellesley Income | Hennessy Balanced vs. Vanguard Wellesley Income | Hennessy Balanced vs. Blackrock Multi Asset Income | Hennessy Balanced vs. The Hartford Balanced |
| Hennessy Total vs. Hennessy Balanced Fund | Hennessy Total vs. Hennessy Nerstone Value | Hennessy Total vs. Hennessy Nerstone Growth | Hennessy Total vs. Harbor Large 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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