Correlation Between Hennessy Technology and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Ab Impact 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 Ab Impact 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 Ab Impact Municipal, you can compare the effects of market volatilities on Hennessy Technology and Ab Impact 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 Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Ab Impact.
Diversification Opportunities for Hennessy Technology and Ab Impact
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and ABIMX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal 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 Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Ab Impact go up and down completely randomly.
Pair Corralation between Hennessy Technology and Ab Impact
Assuming the 90 days horizon Hennessy Technology Fund is expected to under-perform the Ab Impact. In addition to that, Hennessy Technology is 3.45 times more volatile than Ab Impact Municipal. It trades about -0.16 of its total potential returns per unit of risk. Ab Impact Municipal is currently generating about -0.42 per unit of volatility. If you would invest 1,001 in Ab Impact Municipal on October 10, 2024 and sell it today you would lose (29.00) from holding Ab Impact Municipal or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Ab Impact Municipal
Performance |
| Timeline |
| Hennessy Technology |
| Ab Impact Municipal |
Hennessy Technology and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Ab Impact
The main advantage of trading using opposite Hennessy Technology and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Ab Impact 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 Ab Impact will offset losses from the drop in Ab Impact's long position.| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Large Cap | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Hennessy Small Cap |
| Ab Impact vs. Alliancebernstein Global Highome | Ab Impact vs. Ab Global Bond | Ab Impact vs. Barings Global Floating | Ab Impact vs. Morgan Stanley Global |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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