Correlation Between Hennessy Technology and Dreyfus Technology
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Dreyfus Technology 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 Dreyfus Technology 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 Dreyfus Technology Growth, you can compare the effects of market volatilities on Hennessy Technology and Dreyfus Technology 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 Dreyfus Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Dreyfus Technology.
Diversification Opportunities for Hennessy Technology and Dreyfus Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Dreyfus is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Dreyfus Technology Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Technology Growth 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 Dreyfus Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Technology Growth has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Dreyfus Technology go up and down completely randomly.
Pair Corralation between Hennessy Technology and Dreyfus Technology
Assuming the 90 days horizon Hennessy Technology is expected to generate 1.39 times less return on investment than Dreyfus Technology. But when comparing it to its historical volatility, Hennessy Technology Fund is 1.18 times less risky than Dreyfus Technology. It trades about 0.07 of its potential returns per unit of risk. Dreyfus Technology Growth is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,294 in Dreyfus Technology Growth on August 27, 2024 and sell it today you would earn a total of 2,745 from holding Dreyfus Technology Growth or generate 51.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Dreyfus Technology Growth
Performance |
| Timeline |
| Hennessy Technology |
| Dreyfus Technology Growth |
Hennessy Technology and Dreyfus Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Dreyfus Technology
The main advantage of trading using opposite Hennessy Technology and Dreyfus Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Dreyfus Technology 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 Dreyfus Technology will offset losses from the drop in Dreyfus Technology'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 |
| Dreyfus Technology vs. Clearbridge Energy Mlp | Dreyfus Technology vs. Hennessy Bp Energy | Dreyfus Technology vs. Firsthand Alternative Energy | Dreyfus Technology vs. Jennison Natural Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |