Correlation Between Hennessy Cornerstone and Growth Opportunities
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and Growth Opportunities 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 Growth Opportunities 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 Growth Opportunities Fund, you can compare the effects of market volatilities on Hennessy Cornerstone and Growth Opportunities 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 Growth Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Growth Opportunities.
Diversification Opportunities for Hennessy Cornerstone and Growth Opportunities
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Growth is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Growth Opportunities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Opportunities 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 Growth Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Opportunities has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Growth Opportunities go up and down completely randomly.
Pair Corralation between Hennessy Cornerstone and Growth Opportunities
Assuming the 90 days horizon Hennessy Cornerstone is expected to generate 1.03 times less return on investment than Growth Opportunities. In addition to that, Hennessy Cornerstone is 1.25 times more volatile than Growth Opportunities Fund. It trades about 0.09 of its total potential returns per unit of risk. Growth Opportunities Fund is currently generating about 0.11 per unit of volatility. If you would invest 3,341 in Growth Opportunities Fund on September 4, 2024 and sell it today you would earn a total of 2,547 from holding Growth Opportunities Fund or generate 76.23% 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. Growth Opportunities Fund
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| Growth Opportunities |
Hennessy Cornerstone and Growth Opportunities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Cornerstone and Growth Opportunities
The main advantage of trading using opposite Hennessy Cornerstone and Growth Opportunities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, Growth Opportunities 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 Growth Opportunities will offset losses from the drop in Growth Opportunities' 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 |
| Growth Opportunities vs. Balanced Fund Investor | Growth Opportunities vs. Volumetric Fund Volumetric | Growth Opportunities vs. Rbc Microcap Value | Growth Opportunities vs. Scharf Global Opportunity |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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