Correlation Between Hennessy Technology and Gmo Resources
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Gmo Resources 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 Resources 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 Resources, you can compare the effects of market volatilities on Hennessy Technology and Gmo Resources 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 Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Gmo Resources.
Diversification Opportunities for Hennessy Technology and Gmo Resources
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hennessy and Gmo is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources 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 Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Gmo Resources go up and down completely randomly.
Pair Corralation between Hennessy Technology and Gmo Resources
Assuming the 90 days horizon Hennessy Technology is expected to generate 4.24 times less return on investment than Gmo Resources. In addition to that, Hennessy Technology is 1.52 times more volatile than Gmo Resources. It trades about 0.02 of its total potential returns per unit of risk. Gmo Resources is currently generating about 0.1 per unit of volatility. If you would invest 1,976 in Gmo Resources on September 15, 2024 and sell it today you would earn a total of 42.00 from holding Gmo Resources or generate 2.13% 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 Resources
Performance |
| Timeline |
| Hennessy Technology |
| Gmo Resources |
Hennessy Technology and Gmo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Gmo Resources
The main advantage of trading using opposite Hennessy Technology and Gmo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Gmo Resources 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 Resources will offset losses from the drop in Gmo Resources' long position.| Hennessy Technology vs. Veea Inc | Hennessy Technology vs. VivoPower International PLC | Hennessy Technology vs. Hennessy Nerstone Growth | Hennessy Technology vs. Hennessy Nerstone Value |
| Gmo Resources vs. Science Technology Fund | Gmo Resources vs. Hennessy Technology Fund | Gmo Resources vs. Firsthand Technology Opportunities | Gmo Resources vs. Blackrock Science Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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