Correlation Between Hennessy Technology and Nationwide Investor
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Nationwide Investor 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 Nationwide Investor 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 Nationwide Investor Destinations, you can compare the effects of market volatilities on Hennessy Technology and Nationwide Investor 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 Nationwide Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Nationwide Investor.
Diversification Opportunities for Hennessy Technology and Nationwide Investor
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and Nationwide is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Nationwide Investor Destinatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Investor 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 Nationwide Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Investor has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Nationwide Investor go up and down completely randomly.
Pair Corralation between Hennessy Technology and Nationwide Investor
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 4.01 times more return on investment than Nationwide Investor. However, Hennessy Technology is 4.01 times more volatile than Nationwide Investor Destinations. It trades about 0.28 of its potential returns per unit of risk. Nationwide Investor Destinations is currently generating about 0.27 per unit of risk. If you would invest 2,228 in Hennessy Technology Fund on September 1, 2024 and sell it today you would earn a total of 168.00 from holding Hennessy Technology Fund or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Nationwide Investor Destinatio
Performance |
| Timeline |
| Hennessy Technology |
| Nationwide Investor |
Hennessy Technology and Nationwide Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Nationwide Investor
The main advantage of trading using opposite Hennessy Technology and Nationwide Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Nationwide Investor 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 Nationwide Investor will offset losses from the drop in Nationwide Investor'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 |
| Nationwide Investor vs. Hennessy Technology Fund | Nationwide Investor vs. Science Technology Fund | Nationwide Investor vs. Blackrock Science Technology | Nationwide Investor vs. Biotechnology Fund Class |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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