Correlation Between Hennessy and Nasdaq-100 Fund
Can any of the company-specific risk be diversified away by investing in both Hennessy and Nasdaq-100 Fund 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 and Nasdaq-100 Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Bp Energy and Nasdaq 100 Fund Investor, you can compare the effects of market volatilities on Hennessy and Nasdaq-100 Fund 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 with a short position of Nasdaq-100 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Nasdaq-100 Fund.
Diversification Opportunities for Hennessy and Nasdaq-100 Fund
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and NASDAQ-100 is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Nasdaq 100 Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 Fund and Hennessy 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 Bp Energy are associated (or correlated) with Nasdaq-100 Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 Fund has no effect on the direction of Hennessy i.e., Hennessy and Nasdaq-100 Fund go up and down completely randomly.
Pair Corralation between Hennessy and Nasdaq-100 Fund
Assuming the 90 days horizon Hennessy is expected to generate 1.54 times less return on investment than Nasdaq-100 Fund. In addition to that, Hennessy is 1.08 times more volatile than Nasdaq 100 Fund Investor. It trades about 0.05 of its total potential returns per unit of risk. Nasdaq 100 Fund Investor is currently generating about 0.08 per unit of volatility. If you would invest 6,624 in Nasdaq 100 Fund Investor on August 25, 2024 and sell it today you would earn a total of 2,046 from holding Nasdaq 100 Fund Investor or generate 30.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Nasdaq 100 Fund Investor
Performance |
| Timeline |
| Hennessy Bp Energy |
| Nasdaq 100 Fund |
Hennessy and Nasdaq-100 Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Nasdaq-100 Fund
The main advantage of trading using opposite Hennessy and Nasdaq-100 Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Nasdaq-100 Fund 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 Nasdaq-100 Fund will offset losses from the drop in Nasdaq-100 Fund's long position.| Hennessy vs. Vanguard Energy Index | Hennessy vs. Fidelity Select Portfolios | Hennessy vs. Fidelity Advisor Energy | Hennessy vs. Fidelity Advisor Energy |
| Nasdaq-100 Fund vs. Alpsalerian Energy Infrastructure | Nasdaq-100 Fund vs. World Energy Fund | Nasdaq-100 Fund vs. Icon Natural Resources | Nasdaq-100 Fund vs. Hennessy Bp Energy |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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