Correlation Between Hennessy Cornerstone and Cambiar Opportunity
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and Cambiar Opportunity 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 Cornerstone and Cambiar Opportunity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Nerstone Mid and Cambiar Opportunity Fund, you can compare the effects of market volatilities on Hennessy Cornerstone and Cambiar Opportunity 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 Cornerstone with a short position of Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Cambiar Opportunity.
Diversification Opportunities for Hennessy Cornerstone and Cambiar Opportunity
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Cambiar is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity and Hennessy Cornerstone 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 Nerstone Mid are associated (or correlated) with Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Cambiar Opportunity go up and down completely randomly.
Pair Corralation between Hennessy Cornerstone and Cambiar Opportunity
Assuming the 90 days horizon Hennessy Nerstone Mid is expected to generate 1.61 times more return on investment than Cambiar Opportunity. However, Hennessy Cornerstone is 1.61 times more volatile than Cambiar Opportunity Fund. It trades about 0.37 of its potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.25 per unit of risk. If you would invest 2,646 in Hennessy Nerstone Mid on September 2, 2024 and sell it today you would earn a total of 253.00 from holding Hennessy Nerstone Mid or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Nerstone Mid vs. Cambiar Opportunity Fund
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| Cambiar Opportunity |
Hennessy Cornerstone and Cambiar Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Cornerstone and Cambiar Opportunity
The main advantage of trading using opposite Hennessy Cornerstone and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, Cambiar Opportunity 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 Cambiar Opportunity will offset losses from the drop in Cambiar Opportunity's long position.| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Small Company Stock Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund |
| Cambiar Opportunity vs. Boston Partners Small | Cambiar Opportunity vs. Hennessy Nerstone Mid | Cambiar Opportunity vs. Queens Road Small | Cambiar Opportunity vs. Royce Opportunity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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