Correlation Between Hennessy Small and Diversified Bond
Can any of the company-specific risk be diversified away by investing in both Hennessy Small and Diversified Bond 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 Small and Diversified Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Small Cap and Diversified Bond Fund, you can compare the effects of market volatilities on Hennessy Small and Diversified Bond 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 Small with a short position of Diversified Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Small and Diversified Bond.
Diversification Opportunities for Hennessy Small and Diversified Bond
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and Diversified is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap and Diversified Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Bond and Hennessy Small 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 Small Cap are associated (or correlated) with Diversified Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Bond has no effect on the direction of Hennessy Small i.e., Hennessy Small and Diversified Bond go up and down completely randomly.
Pair Corralation between Hennessy Small and Diversified Bond
Assuming the 90 days horizon Hennessy Small Cap is expected to generate 4.68 times more return on investment than Diversified Bond. However, Hennessy Small is 4.68 times more volatile than Diversified Bond Fund. It trades about 0.19 of its potential returns per unit of risk. Diversified Bond Fund is currently generating about 0.06 per unit of risk. If you would invest 1,490 in Hennessy Small Cap on November 3, 2024 and sell it today you would earn a total of 79.00 from holding Hennessy Small Cap or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Small Cap vs. Diversified Bond Fund
Performance |
| Timeline |
| Hennessy Small Cap |
| Diversified Bond |
Hennessy Small and Diversified Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Small and Diversified Bond
The main advantage of trading using opposite Hennessy Small and Diversified Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Small position performs unexpectedly, Diversified Bond 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 Diversified Bond will offset losses from the drop in Diversified Bond's long position.| Hennessy Small vs. Dreyfusstandish Global Fixed | Hennessy Small vs. Angel Oak Financial | Hennessy Small vs. Goldman Sachs Short | Hennessy Small vs. Ab Global Bond |
| Diversified Bond vs. Chartwell Short Duration | Diversified Bond vs. Goldman Sachs High | Diversified Bond vs. Needham Aggressive Growth | Diversified Bond vs. Pace High Yield |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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