Correlation Between Hennessy Technology and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Federated Kaufmann 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 Federated Kaufmann 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 Federated Kaufmann Fund, you can compare the effects of market volatilities on Hennessy Technology and Federated Kaufmann 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 Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Federated Kaufmann.
Diversification Opportunities for Hennessy Technology and Federated Kaufmann
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and Federated is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Federated Kaufmann Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann 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 Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Federated Kaufmann go up and down completely randomly.
Pair Corralation between Hennessy Technology and Federated Kaufmann
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 0.91 times more return on investment than Federated Kaufmann. However, Hennessy Technology Fund is 1.1 times less risky than Federated Kaufmann. It trades about 0.06 of its potential returns per unit of risk. Federated Kaufmann Fund is currently generating about 0.02 per unit of risk. If you would invest 2,019 in Hennessy Technology Fund on September 14, 2024 and sell it today you would earn a total of 360.00 from holding Hennessy Technology Fund or generate 17.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Federated Kaufmann Fund
Performance |
| Timeline |
| Hennessy Technology |
| Federated Kaufmann |
Hennessy Technology and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Federated Kaufmann
The main advantage of trading using opposite Hennessy Technology and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann'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 |
| Federated Kaufmann vs. Calvert High Yield | Federated Kaufmann vs. Franklin High Income | Federated Kaufmann vs. Ab High Income | Federated Kaufmann vs. Siit High Yield |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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