Correlation Between Hennessy Nerstone and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both Hennessy Nerstone and Hennessy Technology 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 Nerstone and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Nerstone Value and Hennessy Technology Fund, you can compare the effects of market volatilities on Hennessy Nerstone and Hennessy Technology 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 Nerstone with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Nerstone and Hennessy Technology.
Diversification Opportunities for Hennessy Nerstone and Hennessy Technology
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Hennessy is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Value and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Hennessy Nerstone 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 Value are associated (or correlated) with Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of Hennessy Nerstone i.e., Hennessy Nerstone and Hennessy Technology go up and down completely randomly.
Pair Corralation between Hennessy Nerstone and Hennessy Technology
Assuming the 90 days horizon Hennessy Nerstone is expected to generate 3.02 times less return on investment than Hennessy Technology. But when comparing it to its historical volatility, Hennessy Nerstone Value is 1.74 times less risky than Hennessy Technology. It trades about 0.05 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,508 in Hennessy Technology Fund on September 14, 2024 and sell it today you would earn a total of 930.00 from holding Hennessy Technology Fund or generate 61.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hennessy Nerstone Value vs. Hennessy Technology Fund
Performance |
| Timeline |
| Hennessy Nerstone Value |
| Hennessy Technology |
Hennessy Nerstone and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Nerstone and Hennessy Technology
The main advantage of trading using opposite Hennessy Nerstone and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Nerstone position performs unexpectedly, Hennessy Technology 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 Hennessy Technology will offset losses from the drop in Hennessy Technology's long position.| Hennessy Nerstone vs. Artisan High Income | Hennessy Nerstone vs. Versatile Bond Portfolio | Hennessy Nerstone vs. Blrc Sgy Mnp | Hennessy Nerstone vs. California Bond Fund |
| Hennessy Technology vs. Veea Inc | Hennessy Technology vs. VivoPower International PLC | Hennessy Technology vs. Hennessy Nerstone Growth | Hennessy Technology vs. Hennessy Nerstone Value |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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