Correlation Between Hennessy Focus and Towle Deep
Can any of the company-specific risk be diversified away by investing in both Hennessy Focus and Towle Deep 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 Towle Deep 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 Towle Deep Value, you can compare the effects of market volatilities on Hennessy Focus and Towle Deep 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 Towle Deep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Focus and Towle Deep.
Diversification Opportunities for Hennessy Focus and Towle Deep
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and TOWLE is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Focus Fund and Towle Deep Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towle Deep Value 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 Towle Deep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towle Deep Value has no effect on the direction of Hennessy Focus i.e., Hennessy Focus and Towle Deep go up and down completely randomly.
Pair Corralation between Hennessy Focus and Towle Deep
Assuming the 90 days horizon Hennessy Focus Fund is expected to generate 1.04 times more return on investment than Towle Deep. However, Hennessy Focus is 1.04 times more volatile than Towle Deep Value. It trades about -0.01 of its potential returns per unit of risk. Towle Deep Value is currently generating about -0.01 per unit of risk. If you would invest 5,320 in Hennessy Focus Fund on October 23, 2024 and sell it today you would lose (672.00) from holding Hennessy Focus Fund or give up 12.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Focus Fund vs. Towle Deep Value
Performance |
| Timeline |
| Hennessy Focus |
| Towle Deep Value |
Hennessy Focus and Towle Deep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Focus and Towle Deep
The main advantage of trading using opposite Hennessy Focus and Towle Deep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Focus position performs unexpectedly, Towle Deep 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 Towle Deep will offset losses from the drop in Towle Deep's long position.| Hennessy Focus vs. Goldman Sachs Local | Hennessy Focus vs. Siit Emerging Markets | Hennessy Focus vs. Extended Market Index | Hennessy Focus vs. Oklahoma College Savings |
| Towle Deep vs. Gmo High Yield | Towle Deep vs. Maryland Tax Free Bond | Towle Deep vs. Georgia Tax Free Bond | Towle Deep vs. Transamerica Intermediate Muni |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |