Correlation Between Hennessy Technology and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Goldman Sachs 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 Goldman Sachs 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 Goldman Sachs E, you can compare the effects of market volatilities on Hennessy Technology and Goldman Sachs 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 Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Goldman Sachs.
Diversification Opportunities for Hennessy Technology and Goldman Sachs
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and Goldman is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Goldman Sachs E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs E 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs E has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Goldman Sachs go up and down completely randomly.
Pair Corralation between Hennessy Technology and Goldman Sachs
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 3.42 times more return on investment than Goldman Sachs. However, Hennessy Technology is 3.42 times more volatile than Goldman Sachs E. It trades about 0.24 of its potential returns per unit of risk. Goldman Sachs E is currently generating about 0.17 per unit of risk. If you would invest 2,252 in Hennessy Technology Fund on September 2, 2024 and sell it today you would earn a total of 144.00 from holding Hennessy Technology Fund or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Goldman Sachs E
Performance |
| Timeline |
| Hennessy Technology |
| Goldman Sachs E |
Hennessy Technology and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Goldman Sachs
The main advantage of trading using opposite Hennessy Technology and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Firsthand Alternative Energy | Hennessy Technology vs. Aquagold International |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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