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 Technology, 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
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Goldman is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology 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 Technology 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 is expected to generate 1.15 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Hennessy Technology Fund is 1.06 times less risky than Goldman Sachs. It trades about 0.08 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,474 in Goldman Sachs Technology on September 3, 2024 and sell it today you would earn a total of 397.00 from holding Goldman Sachs Technology or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Goldman Sachs Technology
Performance |
| Timeline |
| Hennessy Technology |
| Goldman Sachs Technology |
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 Large Cap | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Hennessy Small Cap |
| Goldman Sachs vs. Lind Capital Partners | Goldman Sachs vs. Franklin High Yield | Goldman Sachs vs. T Rowe Price | Goldman Sachs vs. T Rowe Price |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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