Correlation Between Hennessy Small and Akre Focus
Can any of the company-specific risk be diversified away by investing in both Hennessy Small and Akre Focus 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 Small and Akre Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Small Cap and Akre Focus Fund, you can compare the effects of market volatilities on Hennessy Small and Akre Focus 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 Small with a short position of Akre Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Small and Akre Focus.
Diversification Opportunities for Hennessy Small and Akre Focus
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Akre is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap and Akre Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akre Focus Fund and Hennessy Small 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 Small Cap are associated (or correlated) with Akre Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akre Focus Fund has no effect on the direction of Hennessy Small i.e., Hennessy Small and Akre Focus go up and down completely randomly.
Pair Corralation between Hennessy Small and Akre Focus
Assuming the 90 days horizon Hennessy Small Cap is expected to under-perform the Akre Focus. In addition to that, Hennessy Small is 1.7 times more volatile than Akre Focus Fund. It trades about -0.14 of its total potential returns per unit of risk. Akre Focus Fund is currently generating about -0.01 per unit of volatility. If you would invest 6,773 in Akre Focus Fund on November 27, 2024 and sell it today you would lose (17.00) from holding Akre Focus Fund or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Small Cap vs. Akre Focus Fund
Performance |
| Timeline |
| Hennessy Small Cap |
| Akre Focus Fund |
Hennessy Small and Akre Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Small and Akre Focus
The main advantage of trading using opposite Hennessy Small and Akre Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Small position performs unexpectedly, Akre Focus 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 Akre Focus will offset losses from the drop in Akre Focus' long position.| Hennessy Small vs. Hennessy Large Cap | Hennessy Small vs. Rmb Mendon Financial | Hennessy Small vs. Hennessy Focus Fund | Hennessy Small vs. Rmb Mendon Financial |
| Akre Focus vs. Osterweis Strategic Income | Akre Focus vs. Doubleline Low Duration | Akre Focus vs. Doubleline Total Return | Akre Focus vs. Primecap Odyssey 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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