Correlation Between Hennessy Small and Firsthand Alternative
Can any of the company-specific risk be diversified away by investing in both Hennessy Small and Firsthand Alternative 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 Firsthand Alternative 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 Firsthand Alternative Energy, you can compare the effects of market volatilities on Hennessy Small and Firsthand Alternative 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 Firsthand Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Small and Firsthand Alternative.
Diversification Opportunities for Hennessy Small and Firsthand Alternative
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hennessy and Firsthand is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap and Firsthand Alternative Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firsthand Alternative 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 Firsthand Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firsthand Alternative has no effect on the direction of Hennessy Small i.e., Hennessy Small and Firsthand Alternative go up and down completely randomly.
Pair Corralation between Hennessy Small and Firsthand Alternative
Assuming the 90 days horizon Hennessy Small Cap is expected to generate 1.7 times more return on investment than Firsthand Alternative. However, Hennessy Small is 1.7 times more volatile than Firsthand Alternative Energy. It trades about 0.15 of its potential returns per unit of risk. Firsthand Alternative Energy is currently generating about -0.1 per unit of risk. If you would invest 2,736 in Hennessy Small Cap on August 31, 2024 and sell it today you would earn a total of 433.00 from holding Hennessy Small Cap or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Small Cap vs. Firsthand Alternative Energy
Performance |
| Timeline |
| Hennessy Small Cap |
| Firsthand Alternative |
Hennessy Small and Firsthand Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Small and Firsthand Alternative
The main advantage of trading using opposite Hennessy Small and Firsthand Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Small position performs unexpectedly, Firsthand Alternative 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 Firsthand Alternative will offset losses from the drop in Firsthand Alternative's 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 |
| Firsthand Alternative vs. Guinness Atkinson Alternative | Firsthand Alternative vs. Calvert Global Energy | Firsthand Alternative vs. New Alternatives Fund | Firsthand Alternative vs. Shelton Green Alpha |
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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