Correlation Between Hennessy Technology and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Lord Abbett 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 Lord Abbett 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 Lord Abbett Short, you can compare the effects of market volatilities on Hennessy Technology and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Lord Abbett.
Diversification Opportunities for Hennessy Technology and Lord Abbett
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hennessy and Lord is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Lord Abbett Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Short 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Short has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Lord Abbett go up and down completely randomly.
Pair Corralation between Hennessy Technology and Lord Abbett
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 5.44 times more return on investment than Lord Abbett. However, Hennessy Technology is 5.44 times more volatile than Lord Abbett Short. It trades about 0.18 of its potential returns per unit of risk. Lord Abbett Short is currently generating about 0.15 per unit of risk. If you would invest 2,327 in Hennessy Technology Fund on October 25, 2024 and sell it today you would earn a total of 83.00 from holding Hennessy Technology Fund or generate 3.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Lord Abbett Short
Performance |
| Timeline |
| Hennessy Technology |
| Lord Abbett Short |
Hennessy Technology and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Lord Abbett
The main advantage of trading using opposite Hennessy Technology and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett'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 |
| Lord Abbett vs. Fidelity Advisor Technology | Lord Abbett vs. Columbia Global Technology | Lord Abbett vs. Blackrock Science Technology | Lord Abbett vs. Hennessy Technology Fund |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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