Correlation Between Hennessy Large and The Fairholme
Can any of the company-specific risk be diversified away by investing in both Hennessy Large and The Fairholme 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 Large and The Fairholme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Large Cap and The Fairholme Focused, you can compare the effects of market volatilities on Hennessy Large and The Fairholme 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 Large with a short position of The Fairholme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Large and The Fairholme.
Diversification Opportunities for Hennessy Large and The Fairholme
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and THE is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Large Cap and The Fairholme Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairholme Focused and Hennessy Large 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 Large Cap are associated (or correlated) with The Fairholme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairholme Focused has no effect on the direction of Hennessy Large i.e., Hennessy Large and The Fairholme go up and down completely randomly.
Pair Corralation between Hennessy Large and The Fairholme
Assuming the 90 days horizon Hennessy Large Cap is expected to generate 2.92 times more return on investment than The Fairholme. However, Hennessy Large is 2.92 times more volatile than The Fairholme Focused. It trades about 0.25 of its potential returns per unit of risk. The Fairholme Focused is currently generating about 0.46 per unit of risk. If you would invest 3,036 in Hennessy Large Cap on October 25, 2024 and sell it today you would earn a total of 194.00 from holding Hennessy Large Cap or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Large Cap vs. The Fairholme Focused
Performance |
| Timeline |
| Hennessy Large Cap |
| Fairholme Focused |
Hennessy Large and The Fairholme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Large and The Fairholme
The main advantage of trading using opposite Hennessy Large and The Fairholme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Large position performs unexpectedly, The Fairholme 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 The Fairholme will offset losses from the drop in The Fairholme's long position.| Hennessy Large vs. Vanguard Financials Index | Hennessy Large vs. Regional Bank Fund | Hennessy Large vs. T Rowe Price | Hennessy Large vs. Financial Industries Fund |
| The Fairholme vs. Hennessy Large Cap | The Fairholme vs. Davis Financial Fund | The Fairholme vs. Davis Financial Fund | The Fairholme vs. John Hancock Financial |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Stocks Directory Find actively traded stocks across global markets |