Correlation Between Hennessy Technology and Gmo Alternative
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Gmo Alternative 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 Gmo Alternative 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 Gmo Alternative Allocation, you can compare the effects of market volatilities on Hennessy Technology and Gmo Alternative 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 Gmo Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Gmo Alternative.
Diversification Opportunities for Hennessy Technology and Gmo Alternative
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and Gmo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Gmo Alternative Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Alternative Allo 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 Gmo Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Alternative Allo has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Gmo Alternative go up and down completely randomly.
Pair Corralation between Hennessy Technology and Gmo Alternative
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 3.51 times more return on investment than Gmo Alternative. However, Hennessy Technology is 3.51 times more volatile than Gmo Alternative Allocation. It trades about 0.07 of its potential returns per unit of risk. Gmo Alternative Allocation is currently generating about 0.03 per unit of risk. If you would invest 1,664 in Hennessy Technology Fund on November 27, 2024 and sell it today you would earn a total of 662.00 from holding Hennessy Technology Fund or generate 39.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hennessy Technology Fund vs. Gmo Alternative Allocation
Performance |
Timeline |
Hennessy Technology |
Gmo Alternative Allo |
Hennessy Technology and Gmo Alternative Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hennessy Technology and Gmo Alternative
The main advantage of trading using opposite Hennessy Technology and Gmo Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Gmo Alternative 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 Gmo Alternative will offset losses from the drop in Gmo Alternative'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 |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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