Correlation Between Hennessy Technology and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Legg Mason 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 Legg Mason 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 Legg Mason Partners, you can compare the effects of market volatilities on Hennessy Technology and Legg Mason 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 Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Legg Mason.
Diversification Opportunities for Hennessy Technology and Legg Mason
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hennessy and Legg is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Legg Mason Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Partners 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 Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Partners has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Legg Mason go up and down completely randomly.
Pair Corralation between Hennessy Technology and Legg Mason
If you would invest 2,252 in Hennessy Technology Fund on September 2, 2024 and sell it today you would earn a total of 144.00 from holding Hennessy Technology Fund or generate 6.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Legg Mason Partners
Performance |
| Timeline |
| Hennessy Technology |
| Legg Mason Partners |
Hennessy Technology and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Legg Mason
The main advantage of trading using opposite Hennessy Technology and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Firsthand Alternative Energy | Hennessy Technology vs. Aquagold International |
| Legg Mason vs. Touchstone Ultra Short | Legg Mason vs. Astor Longshort Fund | Legg Mason vs. Aqr Sustainable Long Short | Legg Mason vs. Aqr Long Short Equity |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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