Correlation Between Hennessy Technology and Diversified Bond
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Diversified Bond 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 Diversified Bond 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 Diversified Bond Fund, you can compare the effects of market volatilities on Hennessy Technology and Diversified Bond 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 Diversified Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Diversified Bond.
Diversification Opportunities for Hennessy Technology and Diversified Bond
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and Diversified is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Diversified Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Bond 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 Diversified Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Bond has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Diversified Bond go up and down completely randomly.
Pair Corralation between Hennessy Technology and Diversified Bond
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 3.71 times more return on investment than Diversified Bond. However, Hennessy Technology is 3.71 times more volatile than Diversified Bond Fund. It trades about 0.24 of its potential returns per unit of risk. Diversified Bond Fund is currently generating about 0.15 per unit of risk. If you would invest 2,252 in Hennessy Technology Fund on September 2, 2024 and sell it today you would earn a total of 144.00 from holding Hennessy Technology Fund or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Diversified Bond Fund
Performance |
| Timeline |
| Hennessy Technology |
| Diversified Bond |
Hennessy Technology and Diversified Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Diversified Bond
The main advantage of trading using opposite Hennessy Technology and Diversified Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Diversified Bond 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 Diversified Bond will offset losses from the drop in Diversified Bond's long position.| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Firsthand Alternative Energy | Hennessy Technology vs. Aquagold International |
| Diversified Bond vs. Technology Ultrasector Profund | Diversified Bond vs. Columbia Global Technology | Diversified Bond vs. Fidelity Advisor Technology | Diversified Bond vs. Hennessy Technology Fund |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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