Correlation Between Hennessy Technology and Invesco Convertible
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Invesco Convertible 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 Invesco Convertible 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 Invesco Vertible Securities, you can compare the effects of market volatilities on Hennessy Technology and Invesco Convertible 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 Invesco Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Invesco Convertible.
Diversification Opportunities for Hennessy Technology and Invesco Convertible
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Invesco is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Invesco Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Vertible Sec 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 Invesco Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Vertible Sec has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Invesco Convertible go up and down completely randomly.
Pair Corralation between Hennessy Technology and Invesco Convertible
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 2.52 times more return on investment than Invesco Convertible. However, Hennessy Technology is 2.52 times more volatile than Invesco Vertible Securities. It trades about 0.07 of its potential returns per unit of risk. Invesco Vertible Securities is currently generating about 0.08 per unit of risk. If you would invest 1,590 in Hennessy Technology Fund on September 3, 2024 and sell it today you would earn a total of 806.00 from holding Hennessy Technology Fund or generate 50.69% 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. Invesco Vertible Securities
Performance |
| Timeline |
| Hennessy Technology |
| Invesco Vertible Sec |
Hennessy Technology and Invesco Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Invesco Convertible
The main advantage of trading using opposite Hennessy Technology and Invesco Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Invesco Convertible 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 Invesco Convertible will offset losses from the drop in Invesco Convertible'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 |
| Invesco Convertible vs. Artisan Thematic Fund | Invesco Convertible vs. Semiconductor Ultrasector Profund | Invesco Convertible vs. Qs Global Equity | Invesco Convertible vs. Nationwide Global Equity |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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