Correlation Between Hennessy Japan and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both Hennessy Japan and Hennessy Cornerstone 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 Hennessy Cornerstone 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 Hennessy Nerstone Mid, you can compare the effects of market volatilities on Hennessy Japan and Hennessy Cornerstone 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 Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Japan and Hennessy Cornerstone.
Diversification Opportunities for Hennessy Japan and Hennessy Cornerstone
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Hennessy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Japan Fund and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid 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 Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Mid has no effect on the direction of Hennessy Japan i.e., Hennessy Japan and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between Hennessy Japan and Hennessy Cornerstone
Assuming the 90 days horizon Hennessy Japan is expected to generate 2.65 times less return on investment than Hennessy Cornerstone. In addition to that, Hennessy Japan is 1.17 times more volatile than Hennessy Nerstone Mid. It trades about 0.1 of its total potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about 0.31 per unit of volatility. If you would invest 2,386 in Hennessy Nerstone Mid on November 2, 2024 and sell it today you would earn a total of 133.00 from holding Hennessy Nerstone Mid or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Hennessy Japan Fund vs. Hennessy Nerstone Mid
Performance |
| Timeline |
| Hennessy Japan |
| Hennessy Nerstone Mid |
Hennessy Japan and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Japan and Hennessy Cornerstone
The main advantage of trading using opposite Hennessy Japan and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Japan position performs unexpectedly, Hennessy Cornerstone 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 Hennessy Cornerstone will offset losses from the drop in Hennessy Cornerstone'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 |
| Hennessy Cornerstone vs. International Investors Gold | Hennessy Cornerstone vs. James Balanced Golden | Hennessy Cornerstone vs. Fidelity Advisor Gold | Hennessy Cornerstone vs. Investment Managers Series |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |