Correlation Between Hennessy Focus and Wells Fargo
Can any of the company-specific risk be diversified away by investing in both Hennessy Focus and Wells Fargo 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 Focus and Wells Fargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Focus Fund and Wells Fargo Large, you can compare the effects of market volatilities on Hennessy Focus and Wells Fargo 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 Focus with a short position of Wells Fargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Focus and Wells Fargo.
Diversification Opportunities for Hennessy Focus and Wells Fargo
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hennessy and Wells is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Focus Fund and Wells Fargo Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wells Fargo Large and Hennessy Focus 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 Focus Fund are associated (or correlated) with Wells Fargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wells Fargo Large has no effect on the direction of Hennessy Focus i.e., Hennessy Focus and Wells Fargo go up and down completely randomly.
Pair Corralation between Hennessy Focus and Wells Fargo
If you would invest 5,475 in Hennessy Focus Fund on August 30, 2024 and sell it today you would earn a total of 130.00 from holding Hennessy Focus Fund or generate 2.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.35% |
| Values | Daily Returns |
Hennessy Focus Fund vs. Wells Fargo Large
Performance |
| Timeline |
| Hennessy Focus |
| Wells Fargo Large |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hennessy Focus and Wells Fargo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Focus and Wells Fargo
The main advantage of trading using opposite Hennessy Focus and Wells Fargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Focus position performs unexpectedly, Wells Fargo 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 Wells Fargo will offset losses from the drop in Wells Fargo's long position.| Hennessy Focus vs. Hennessy Nerstone Growth | Hennessy Focus vs. Hennessy Nerstone Value | Hennessy Focus vs. Hennessy Nerstone Mid | Hennessy Focus vs. Hennessy Large Cap |
| Wells Fargo vs. Wells Fargo Large | Wells Fargo vs. Wells Fargo Large | Wells Fargo vs. Wells Fargo Large | Wells Fargo vs. Dow 2x Strategy |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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