Correlation Between Hennessy Japan and Black Oak
Can any of the company-specific risk be diversified away by investing in both Hennessy Japan and Black Oak 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 Black Oak 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 Black Oak Emerging, you can compare the effects of market volatilities on Hennessy Japan and Black Oak 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 Black Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Japan and Black Oak.
Diversification Opportunities for Hennessy Japan and Black Oak
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and Black is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Japan Fund and Black Oak Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Oak Emerging 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 Black Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Oak Emerging has no effect on the direction of Hennessy Japan i.e., Hennessy Japan and Black Oak go up and down completely randomly.
Pair Corralation between Hennessy Japan and Black Oak
Assuming the 90 days horizon Hennessy Japan Fund is expected to under-perform the Black Oak. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hennessy Japan Fund is 1.41 times less risky than Black Oak. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Black Oak Emerging is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 808.00 in Black Oak Emerging on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Black Oak Emerging or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Japan Fund vs. Black Oak Emerging
Performance |
| Timeline |
| Hennessy Japan |
| Black Oak Emerging |
Hennessy Japan and Black Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Japan and Black Oak
The main advantage of trading using opposite Hennessy Japan and Black Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Japan position performs unexpectedly, Black Oak 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 Black Oak will offset losses from the drop in Black Oak's long position.| Hennessy Japan vs. Hennessy Japan Small | Hennessy Japan vs. Hennessy Japan Fund | Hennessy Japan vs. Matthews Japan Fund | Hennessy Japan vs. Matthews Japan Fund |
| Black Oak vs. Red Oak Technology | Black Oak vs. Pin Oak Equity | Black Oak vs. White Oak Select | Black Oak vs. Live Oak Health |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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