Correlation Between Hennessy Focus and Fulcrum Diversified
Can any of the company-specific risk be diversified away by investing in both Hennessy Focus and Fulcrum Diversified 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 Fulcrum Diversified 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 Fulcrum Diversified Absolute, you can compare the effects of market volatilities on Hennessy Focus and Fulcrum Diversified 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 Fulcrum Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Focus and Fulcrum Diversified.
Diversification Opportunities for Hennessy Focus and Fulcrum Diversified
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hennessy and Fulcrum is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Focus Fund and Fulcrum Diversified Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Diversified 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 Fulcrum Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Diversified has no effect on the direction of Hennessy Focus i.e., Hennessy Focus and Fulcrum Diversified go up and down completely randomly.
Pair Corralation between Hennessy Focus and Fulcrum Diversified
Assuming the 90 days horizon Hennessy Focus Fund is expected to generate 3.94 times more return on investment than Fulcrum Diversified. However, Hennessy Focus is 3.94 times more volatile than Fulcrum Diversified Absolute. It trades about 0.01 of its potential returns per unit of risk. Fulcrum Diversified Absolute is currently generating about 0.03 per unit of risk. If you would invest 4,695 in Hennessy Focus Fund on September 13, 2024 and sell it today you would earn a total of 78.00 from holding Hennessy Focus Fund or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Focus Fund vs. Fulcrum Diversified Absolute
Performance |
| Timeline |
| Hennessy Focus |
| Fulcrum Diversified |
Hennessy Focus and Fulcrum Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Focus and Fulcrum Diversified
The main advantage of trading using opposite Hennessy Focus and Fulcrum Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Focus position performs unexpectedly, Fulcrum Diversified 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 Fulcrum Diversified will offset losses from the drop in Fulcrum Diversified's long position.| Hennessy Focus vs. Fulcrum Diversified Absolute | Hennessy Focus vs. Aqr Diversified Arbitrage | Hennessy Focus vs. Lord Abbett Diversified | Hennessy Focus vs. Global Diversified Income |
| Fulcrum Diversified vs. Fidelity Advisor Gold | Fulcrum Diversified vs. Invesco Gold Special | Fulcrum Diversified vs. Precious Metals And | Fulcrum Diversified vs. James Balanced Golden |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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