Correlation Between Hennessy Technology and Black Oak
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Black Oak 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 Black Oak 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 Black Oak Emerging, you can compare the effects of market volatilities on Hennessy Technology and Black Oak 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 Black Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Black Oak.
Diversification Opportunities for Hennessy Technology and Black Oak
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Black is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Black Oak Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Oak Emerging 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 Black Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Oak Emerging has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Black Oak go up and down completely randomly.
Pair Corralation between Hennessy Technology and Black Oak
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 1.02 times more return on investment than Black Oak. However, Hennessy Technology is 1.02 times more volatile than Black Oak Emerging. It trades about 0.16 of its potential returns per unit of risk. Black Oak Emerging is currently generating about 0.08 per unit of risk. If you would invest 2,274 in Hennessy Technology Fund on August 28, 2024 and sell it today you would earn a total of 103.00 from holding Hennessy Technology Fund or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Black Oak Emerging
Performance |
| Timeline |
| Hennessy Technology |
| Black Oak Emerging |
Hennessy Technology and Black Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Black Oak
The main advantage of trading using opposite Hennessy Technology and Black Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Black Oak 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 Black Oak will offset losses from the drop in Black Oak'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 |
| Black Oak vs. Red Oak Technology | Black Oak vs. Pin Oak Equity | Black Oak vs. White Oak Select | Black Oak vs. Live Oak Health |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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