Correlation Between Hennessy Total and Walden Equity
Can any of the company-specific risk be diversified away by investing in both Hennessy Total and Walden Equity 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 Total and Walden Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Total Return and Walden Equity Fund, you can compare the effects of market volatilities on Hennessy Total and Walden Equity 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 Total with a short position of Walden Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Total and Walden Equity.
Diversification Opportunities for Hennessy Total and Walden Equity
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hennessy and Walden is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Total Return and Walden Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walden Equity and Hennessy Total 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 Total Return are associated (or correlated) with Walden Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walden Equity has no effect on the direction of Hennessy Total i.e., Hennessy Total and Walden Equity go up and down completely randomly.
Pair Corralation between Hennessy Total and Walden Equity
Assuming the 90 days horizon Hennessy Total is expected to generate 2.71 times less return on investment than Walden Equity. But when comparing it to its historical volatility, Hennessy Total Return is 1.22 times less risky than Walden Equity. It trades about 0.03 of its potential returns per unit of risk. Walden Equity Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 3,044 in Walden Equity Fund on September 3, 2024 and sell it today you would earn a total of 827.00 from holding Walden Equity Fund or generate 27.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Total Return vs. Walden Equity Fund
Performance |
| Timeline |
| Hennessy Total Return |
| Walden Equity |
Hennessy Total and Walden Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Total and Walden Equity
The main advantage of trading using opposite Hennessy Total and Walden Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Total position performs unexpectedly, Walden Equity 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 Walden Equity will offset losses from the drop in Walden Equity's long position.| Hennessy Total vs. Hennessy Balanced Fund | Hennessy Total vs. Hennessy Nerstone Value | Hennessy Total vs. Hennessy Nerstone Growth | Hennessy Total vs. Harbor Large Cap |
| Walden Equity vs. Walden Asset Management | Walden Equity vs. Calvert Large Cap | Walden Equity vs. Calvert Equity Portfolio | Walden Equity vs. Appleseed Fund Appleseed |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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