Correlation Between Hennessy Technology and Jpmorgan Income
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Jpmorgan Income 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 Jpmorgan Income 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 Jpmorgan Income Builder, you can compare the effects of market volatilities on Hennessy Technology and Jpmorgan Income 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 Jpmorgan Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Jpmorgan Income.
Diversification Opportunities for Hennessy Technology and Jpmorgan Income
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Jpmorgan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Jpmorgan Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Income Builder 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 Jpmorgan Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Income Builder has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Jpmorgan Income go up and down completely randomly.
Pair Corralation between Hennessy Technology and Jpmorgan Income
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 2.35 times more return on investment than Jpmorgan Income. However, Hennessy Technology is 2.35 times more volatile than Jpmorgan Income Builder. It trades about 0.19 of its potential returns per unit of risk. Jpmorgan Income Builder is currently generating about 0.19 per unit of risk. If you would invest 2,303 in Hennessy Technology Fund on October 23, 2024 and sell it today you would earn a total of 91.00 from holding Hennessy Technology Fund or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Jpmorgan Income Builder
Performance |
| Timeline |
| Hennessy Technology |
| Jpmorgan Income Builder |
Hennessy Technology and Jpmorgan Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Jpmorgan Income
The main advantage of trading using opposite Hennessy Technology and Jpmorgan Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Jpmorgan Income 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 Jpmorgan Income will offset losses from the drop in Jpmorgan Income'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 |
| Jpmorgan Income vs. Vanguard Information Technology | Jpmorgan Income vs. Science Technology Fund | Jpmorgan Income vs. Hennessy Technology Fund | Jpmorgan Income vs. Columbia Global 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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