Correlation Between Hennessy Japan and Polen Growth
Can any of the company-specific risk be diversified away by investing in both Hennessy Japan and Polen Growth 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 Polen Growth 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 Polen Growth Fund, you can compare the effects of market volatilities on Hennessy Japan and Polen Growth 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 Polen Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Japan and Polen Growth.
Diversification Opportunities for Hennessy Japan and Polen Growth
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hennessy and Polen is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Japan Fund and Polen Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polen Growth 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 Polen Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polen Growth has no effect on the direction of Hennessy Japan i.e., Hennessy Japan and Polen Growth go up and down completely randomly.
Pair Corralation between Hennessy Japan and Polen Growth
Assuming the 90 days horizon Hennessy Japan is expected to generate 19.71 times less return on investment than Polen Growth. But when comparing it to its historical volatility, Hennessy Japan Fund is 1.11 times less risky than Polen Growth. It trades about 0.01 of its potential returns per unit of risk. Polen Growth Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 4,730 in Polen Growth Fund on August 30, 2024 and sell it today you would earn a total of 281.00 from holding Polen Growth Fund or generate 5.94% 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. Polen Growth Fund
Performance |
| Timeline |
| Hennessy Japan |
| Polen Growth |
Hennessy Japan and Polen Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Japan and Polen Growth
The main advantage of trading using opposite Hennessy Japan and Polen Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Japan position performs unexpectedly, Polen Growth 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 Polen Growth will offset losses from the drop in Polen Growth'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 |
| Polen Growth vs. Congress Mid Cap | Polen Growth vs. Wcm Focused International | Polen Growth vs. Polen Growth Fund | Polen Growth vs. Polen International Growth |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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