Correlation Between Hennessy Technology and Aqr Long
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Aqr Long 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 Technology and Aqr Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Technology Fund and Aqr Long Short Equity, you can compare the effects of market volatilities on Hennessy Technology and Aqr Long 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 Technology with a short position of Aqr Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Aqr Long.
Diversification Opportunities for Hennessy Technology and Aqr Long
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Aqr is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Aqr Long Short Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Long Short and Hennessy Technology 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 Technology Fund are associated (or correlated) with Aqr Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Long Short has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Aqr Long go up and down completely randomly.
Pair Corralation between Hennessy Technology and Aqr Long
Assuming the 90 days horizon Hennessy Technology is expected to generate 2.21 times less return on investment than Aqr Long. In addition to that, Hennessy Technology is 2.9 times more volatile than Aqr Long Short Equity. It trades about 0.04 of its total potential returns per unit of risk. Aqr Long Short Equity is currently generating about 0.23 per unit of volatility. If you would invest 1,582 in Aqr Long Short Equity on September 13, 2024 and sell it today you would earn a total of 78.00 from holding Aqr Long Short Equity or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.67% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Aqr Long Short Equity
Performance |
| Timeline |
| Hennessy Technology |
| Aqr Long Short |
Hennessy Technology and Aqr Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Aqr Long
The main advantage of trading using opposite Hennessy Technology and Aqr Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Aqr Long 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 Aqr Long will offset losses from the drop in Aqr Long's long position.| Hennessy Technology vs. Aqr Long Short Equity | Hennessy Technology vs. Shelton Emerging Markets | Hennessy Technology vs. Sp Midcap Index | Hennessy Technology vs. T Rowe Price |
| Aqr Long vs. Needham Aggressive Growth | Aqr Long vs. Alliancebernstein Global High | Aqr Long vs. Artisan High Income | Aqr Long vs. Pace High Yield |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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