Correlation Between Henderson European and Henderson International
Can any of the company-specific risk be diversified away by investing in both Henderson European and Henderson International 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 Henderson European and Henderson International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Henderson European Focus and Henderson International Opportunities, you can compare the effects of market volatilities on Henderson European and Henderson International 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 Henderson European with a short position of Henderson International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Henderson European and Henderson International.
Diversification Opportunities for Henderson European and Henderson International
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Henderson and Henderson is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Henderson European Focus and Henderson International Opport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson International and Henderson European 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 Henderson European Focus are associated (or correlated) with Henderson International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson International has no effect on the direction of Henderson European i.e., Henderson European and Henderson International go up and down completely randomly.
Pair Corralation between Henderson European and Henderson International
Assuming the 90 days horizon Henderson European Focus is expected to generate 1.28 times more return on investment than Henderson International. However, Henderson European is 1.28 times more volatile than Henderson International Opportunities. It trades about 0.05 of its potential returns per unit of risk. Henderson International Opportunities is currently generating about 0.05 per unit of risk. If you would invest 3,900 in Henderson European Focus on November 2, 2024 and sell it today you would earn a total of 894.00 from holding Henderson European Focus or generate 22.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 18.42% |
| Values | Daily Returns |
Henderson European Focus vs. Henderson International Opport
Performance |
| Timeline |
| Henderson European Focus |
| Henderson International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Henderson European and Henderson International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Henderson European and Henderson International
The main advantage of trading using opposite Henderson European and Henderson International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Henderson European position performs unexpectedly, Henderson International 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 Henderson International will offset losses from the drop in Henderson International's long position.| Henderson European vs. Invesco European Small | Henderson European vs. Henderson European Focus | Henderson European vs. Invesco European Growth | Henderson European vs. Jpmorgan Intrepid European |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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