Correlation Between Hennessy Cornerstone and Federated Ultrashort
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and Federated Ultrashort 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 Federated Ultrashort 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 Federated Ultrashort Bond, you can compare the effects of market volatilities on Hennessy Cornerstone and Federated Ultrashort 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 Federated Ultrashort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Federated Ultrashort.
Diversification Opportunities for Hennessy Cornerstone and Federated Ultrashort
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Federated is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Federated Ultrashort Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ultrashort Bond 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 Federated Ultrashort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ultrashort Bond has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Federated Ultrashort go up and down completely randomly.
Pair Corralation between Hennessy Cornerstone and Federated Ultrashort
Assuming the 90 days horizon Hennessy Nerstone Mid is expected to generate 28.59 times more return on investment than Federated Ultrashort. However, Hennessy Cornerstone is 28.59 times more volatile than Federated Ultrashort Bond. It trades about 0.33 of its potential returns per unit of risk. Federated Ultrashort Bond is currently generating about 0.13 per unit of risk. If you would invest 2,661 in Hennessy Nerstone Mid on September 4, 2024 and sell it today you would earn a total of 232.00 from holding Hennessy Nerstone Mid or generate 8.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hennessy Nerstone Mid vs. Federated Ultrashort Bond
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| Federated Ultrashort Bond |
Hennessy Cornerstone and Federated Ultrashort Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Cornerstone and Federated Ultrashort
The main advantage of trading using opposite Hennessy Cornerstone and Federated Ultrashort positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, Federated Ultrashort 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 Federated Ultrashort will offset losses from the drop in Federated Ultrashort's long position.| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund | Hennessy Cornerstone vs. Boston Partners All Cap |
| Federated Ultrashort vs. Scharf Global Opportunity | Federated Ultrashort vs. Acm Dynamic Opportunity | Federated Ultrashort vs. Fa 529 Aggressive | Federated Ultrashort vs. Materials Portfolio Fidelity |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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