Correlation Between Hennessy Technology and Federated Mdt
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Federated Mdt 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 Federated Mdt 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 Federated Mdt Mid Cap, you can compare the effects of market volatilities on Hennessy Technology and Federated Mdt 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 Federated Mdt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Federated Mdt.
Diversification Opportunities for Hennessy Technology and Federated Mdt
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Federated is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Federated Mdt Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Mid 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 Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Mid has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Federated Mdt go up and down completely randomly.
Pair Corralation between Hennessy Technology and Federated Mdt
Assuming the 90 days horizon Hennessy Technology is expected to generate 1.03 times less return on investment than Federated Mdt. In addition to that, Hennessy Technology is 1.07 times more volatile than Federated Mdt Mid Cap. It trades about 0.17 of its total potential returns per unit of risk. Federated Mdt Mid Cap is currently generating about 0.18 per unit of volatility. If you would invest 5,946 in Federated Mdt Mid Cap on October 25, 2024 and sell it today you would earn a total of 199.00 from holding Federated Mdt Mid Cap or generate 3.35% 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. Federated Mdt Mid Cap
Performance |
| Timeline |
| Hennessy Technology |
| Federated Mdt Mid |
Hennessy Technology and Federated Mdt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Federated Mdt
The main advantage of trading using opposite Hennessy Technology and Federated Mdt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Federated Mdt 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 Federated Mdt will offset losses from the drop in Federated Mdt'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 |
| Federated Mdt vs. Large Cap Growth Profund | Federated Mdt vs. Dodge Cox Stock | Federated Mdt vs. Tax Managed Large Cap | Federated Mdt vs. Calvert Large Cap |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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