Correlation Between Hennessy Japan and Matthews Japan
Can any of the company-specific risk be diversified away by investing in both Hennessy Japan and Matthews Japan 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 Japan and Matthews Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Japan Fund and Matthews Japan Fund, you can compare the effects of market volatilities on Hennessy Japan and Matthews Japan 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 Japan with a short position of Matthews Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Japan and Matthews Japan.
Diversification Opportunities for Hennessy Japan and Matthews Japan
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Matthews is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Japan Fund and Matthews Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Japan and Hennessy Japan 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 Japan Fund are associated (or correlated) with Matthews Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Japan has no effect on the direction of Hennessy Japan i.e., Hennessy Japan and Matthews Japan go up and down completely randomly.
Pair Corralation between Hennessy Japan and Matthews Japan
Assuming the 90 days horizon Hennessy Japan Fund is expected to generate 1.12 times more return on investment than Matthews Japan. However, Hennessy Japan is 1.12 times more volatile than Matthews Japan Fund. It trades about 0.22 of its potential returns per unit of risk. Matthews Japan Fund is currently generating about 0.17 per unit of risk. If you would invest 4,503 in Hennessy Japan Fund on September 1, 2024 and sell it today you would earn a total of 209.00 from holding Hennessy Japan Fund or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Japan Fund vs. Matthews Japan Fund
Performance |
| Timeline |
| Hennessy Japan |
| Matthews Japan |
Hennessy Japan and Matthews Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Japan and Matthews Japan
The main advantage of trading using opposite Hennessy Japan and Matthews Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Japan position performs unexpectedly, Matthews Japan 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 Matthews Japan will offset losses from the drop in Matthews Japan's long position.| Hennessy Japan vs. Hennessy Japan Fund | Hennessy Japan vs. Hennessy Japan Small | Hennessy Japan vs. Matthews Japan Fund | Hennessy Japan vs. Matthews India Fund |
| Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews India Fund | Matthews Japan vs. Hennessy Japan Fund | Matthews Japan vs. Matthews Asia Dividend |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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