Correlation Between Hennessy Technology and Fidelity New
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Fidelity New 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 Fidelity New 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 Fidelity New Markets, you can compare the effects of market volatilities on Hennessy Technology and Fidelity New 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 Fidelity New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Fidelity New.
Diversification Opportunities for Hennessy Technology and Fidelity New
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hennessy and Fidelity is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Fidelity New Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity New Markets 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 Fidelity New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity New Markets has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Fidelity New go up and down completely randomly.
Pair Corralation between Hennessy Technology and Fidelity New
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 3.87 times more return on investment than Fidelity New. However, Hennessy Technology is 3.87 times more volatile than Fidelity New Markets. It trades about 0.06 of its potential returns per unit of risk. Fidelity New Markets is currently generating about 0.09 per unit of risk. If you would invest 2,134 in Hennessy Technology Fund on September 3, 2024 and sell it today you would earn a total of 262.00 from holding Hennessy Technology Fund or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Fidelity New Markets
Performance |
| Timeline |
| Hennessy Technology |
| Fidelity New Markets |
Hennessy Technology and Fidelity New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Fidelity New
The main advantage of trading using opposite Hennessy Technology and Fidelity New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Fidelity New 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 Fidelity New will offset losses from the drop in Fidelity New'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 |
| Fidelity New vs. International Investors Gold | Fidelity New vs. Short Precious Metals | Fidelity New vs. Global Gold Fund | Fidelity New vs. Franklin Gold Precious |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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