Correlation Between Hennessy Focus and Zacks Small-cap
Can any of the company-specific risk be diversified away by investing in both Hennessy Focus and Zacks Small-cap 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 Zacks Small-cap 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 Zacks Small Cap E, you can compare the effects of market volatilities on Hennessy Focus and Zacks Small-cap 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 Zacks Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Focus and Zacks Small-cap.
Diversification Opportunities for Hennessy Focus and Zacks Small-cap
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Zacks is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Focus Fund and Zacks Small Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zacks Small Cap 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 Zacks Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zacks Small Cap has no effect on the direction of Hennessy Focus i.e., Hennessy Focus and Zacks Small-cap go up and down completely randomly.
Pair Corralation between Hennessy Focus and Zacks Small-cap
Assuming the 90 days horizon Hennessy Focus is expected to generate 1.34 times less return on investment than Zacks Small-cap. But when comparing it to its historical volatility, Hennessy Focus Fund is 1.68 times less risky than Zacks Small-cap. It trades about 0.28 of its potential returns per unit of risk. Zacks Small Cap E is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,696 in Zacks Small Cap E on September 1, 2024 and sell it today you would earn a total of 304.00 from holding Zacks Small Cap E or generate 8.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Focus Fund vs. Zacks Small Cap E
Performance |
| Timeline |
| Hennessy Focus |
| Zacks Small Cap |
Hennessy Focus and Zacks Small-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Focus and Zacks Small-cap
The main advantage of trading using opposite Hennessy Focus and Zacks Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Focus position performs unexpectedly, Zacks Small-cap 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 Zacks Small-cap will offset losses from the drop in Zacks Small-cap's long position.| Hennessy Focus vs. Hennessy Nerstone Mid | Hennessy Focus vs. Amg Yacktman Focused | Hennessy Focus vs. Parnassus Endeavor Fund | Hennessy Focus vs. Hennessy Small Cap |
| Zacks Small-cap vs. Zacks Small Cap E | Zacks Small-cap vs. Towle Deep Value | Zacks Small-cap vs. Prudential Qma Small Cap | Zacks Small-cap vs. Paradigm Micro Cap Fund |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |