Correlation Between Hennessy Small and Icon Financial
Can any of the company-specific risk be diversified away by investing in both Hennessy Small and Icon Financial 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 Icon Financial 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 Icon Financial Fund, you can compare the effects of market volatilities on Hennessy Small and Icon Financial 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 Icon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Small and Icon Financial.
Diversification Opportunities for Hennessy Small and Icon Financial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and Icon is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap and Icon Financial Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icon Financial 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 Icon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icon Financial has no effect on the direction of Hennessy Small i.e., Hennessy Small and Icon Financial go up and down completely randomly.
Pair Corralation between Hennessy Small and Icon Financial
Assuming the 90 days horizon Hennessy Small is expected to generate 1.05 times less return on investment than Icon Financial. In addition to that, Hennessy Small is 1.85 times more volatile than Icon Financial Fund. It trades about 0.03 of its total potential returns per unit of risk. Icon Financial Fund is currently generating about 0.06 per unit of volatility. If you would invest 959.00 in Icon Financial Fund on October 23, 2024 and sell it today you would earn a total of 8.00 from holding Icon Financial Fund or generate 0.83% 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. Icon Financial Fund
Performance |
| Timeline |
| Hennessy Small Cap |
| Icon Financial |
Hennessy Small and Icon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Small and Icon Financial
The main advantage of trading using opposite Hennessy Small and Icon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Small position performs unexpectedly, Icon Financial 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 Icon Financial will offset losses from the drop in Icon Financial's long position.| Hennessy Small vs. Barings High Yield | Hennessy Small vs. Prudential High Yield | Hennessy Small vs. Transamerica High Yield | Hennessy Small vs. Artisan High Income |
| Icon Financial vs. Hsbc Treasury Money | Icon Financial vs. State Street Master | Icon Financial vs. Aig Government Money | Icon Financial vs. Transamerica Funds |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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