Correlation Between Hennessy Cornerstone and Income Stock
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and Income Stock 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 Income Stock 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 Income Stock Fund, you can compare the effects of market volatilities on Hennessy Cornerstone and Income Stock 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 Income Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Income Stock.
Diversification Opportunities for Hennessy Cornerstone and Income Stock
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Income is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Income Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Stock 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 Income Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Stock has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Income Stock go up and down completely randomly.
Pair Corralation between Hennessy Cornerstone and Income Stock
Assuming the 90 days horizon Hennessy Nerstone Mid is expected to generate 1.58 times more return on investment than Income Stock. However, Hennessy Cornerstone is 1.58 times more volatile than Income Stock Fund. It trades about 0.36 of its potential returns per unit of risk. Income Stock Fund is currently generating about 0.33 per unit of risk. If you would invest 2,648 in Hennessy Nerstone Mid on September 1, 2024 and sell it today you would earn a total of 251.00 from holding Hennessy Nerstone Mid or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Nerstone Mid vs. Income Stock Fund
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| Income Stock |
Hennessy Cornerstone and Income Stock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Cornerstone and Income Stock
The main advantage of trading using opposite Hennessy Cornerstone and Income Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, Income Stock 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 Income Stock will offset losses from the drop in Income Stock'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 |
| Income Stock vs. Capital Growth Fund | Income Stock vs. Emerging Markets Fund | Income Stock vs. High Income Fund | Income Stock vs. International Fund International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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