Correlation Between Hennessy Technology and The Fairholme
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and The Fairholme 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 The Fairholme 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 The Fairholme Fund, you can compare the effects of market volatilities on Hennessy Technology and The Fairholme 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 The Fairholme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and The Fairholme.
Diversification Opportunities for Hennessy Technology and The Fairholme
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hennessy and The is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and The Fairholme Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Fairholme 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 The Fairholme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Fairholme has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and The Fairholme go up and down completely randomly.
Pair Corralation between Hennessy Technology and The Fairholme
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 0.73 times more return on investment than The Fairholme. However, Hennessy Technology Fund is 1.37 times less risky than The Fairholme. It trades about 0.07 of its potential returns per unit of risk. The Fairholme Fund is currently generating about 0.03 per unit of risk. If you would invest 1,788 in Hennessy Technology Fund on August 31, 2024 and sell it today you would earn a total of 608.00 from holding Hennessy Technology Fund or generate 34.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Hennessy Technology Fund vs. The Fairholme Fund
Performance |
| Timeline |
| Hennessy Technology |
| The Fairholme |
Hennessy Technology and The Fairholme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and The Fairholme
The main advantage of trading using opposite Hennessy Technology and The Fairholme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, The Fairholme 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 The Fairholme will offset losses from the drop in The Fairholme'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 |
| The Fairholme vs. Dodge Cox Stock | The Fairholme vs. American Mutual Fund | The Fairholme vs. American Funds American | The Fairholme vs. American Funds American |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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