Correlation Between Hennessy Large and Total Return
Can any of the company-specific risk be diversified away by investing in both Hennessy Large and Total Return 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 Total Return 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 Total Return Fund, you can compare the effects of market volatilities on Hennessy Large and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Large and Total Return.
Diversification Opportunities for Hennessy Large and Total Return
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hennessy and Total is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Large Cap and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Hennessy Large i.e., Hennessy Large and Total Return go up and down completely randomly.
Pair Corralation between Hennessy Large and Total Return
Assuming the 90 days horizon Hennessy Large Cap is expected to generate 7.14 times more return on investment than Total Return. However, Hennessy Large is 7.14 times more volatile than Total Return Fund. It trades about 0.28 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.09 per unit of risk. If you would invest 2,769 in Hennessy Large Cap on September 1, 2024 and sell it today you would earn a total of 443.00 from holding Hennessy Large Cap or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Large Cap vs. Total Return Fund
Performance |
| Timeline |
| Hennessy Large Cap |
| Total Return |
Hennessy Large and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Large and Total Return
The main advantage of trading using opposite Hennessy Large and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Large position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Hennessy Large vs. Hennessy Large Cap | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. T Rowe Price |
| Total Return vs. Aqr Managed Futures | Total Return vs. Western Asset Inflation | Total Return vs. Ab Bond Inflation | Total Return vs. Guidepath Managed Futures |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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