Correlation Between Hennessy Japan and Fidelity Japan
Can any of the company-specific risk be diversified away by investing in both Hennessy Japan and Fidelity 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 Fidelity 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 Fidelity Japan Fund, you can compare the effects of market volatilities on Hennessy Japan and Fidelity 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 Fidelity Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Japan and Fidelity Japan.
Diversification Opportunities for Hennessy Japan and Fidelity Japan
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Fidelity is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Japan Fund and Fidelity Japan Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity 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 Fidelity Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Japan has no effect on the direction of Hennessy Japan i.e., Hennessy Japan and Fidelity Japan go up and down completely randomly.
Pair Corralation between Hennessy Japan and Fidelity Japan
Assuming the 90 days horizon Hennessy Japan is expected to generate 1.21 times less return on investment than Fidelity Japan. In addition to that, Hennessy Japan is 1.13 times more volatile than Fidelity Japan Fund. It trades about 0.03 of its total potential returns per unit of risk. Fidelity Japan Fund is currently generating about 0.04 per unit of volatility. If you would invest 1,669 in Fidelity Japan Fund on September 1, 2024 and sell it today you would earn a total of 113.00 from holding Fidelity Japan Fund or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Hennessy Japan Fund vs. Fidelity Japan Fund
Performance |
| Timeline |
| Hennessy Japan |
| Fidelity Japan |
Hennessy Japan and Fidelity Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Japan and Fidelity Japan
The main advantage of trading using opposite Hennessy Japan and Fidelity Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Japan position performs unexpectedly, Fidelity 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 Fidelity Japan will offset losses from the drop in Fidelity Japan'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 |
| Fidelity Japan vs. Fidelity Japan Smaller | Fidelity Japan vs. Fidelity Europe Fund | Fidelity Japan vs. Fidelity Pacific Basin | Fidelity Japan vs. Fidelity Emerging Asia |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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