Correlation Between Hennessy Technology and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners International, you can compare the effects of market volatilities on Hennessy Technology and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Longleaf Partners.
Diversification Opportunities for Hennessy Technology and Longleaf Partners
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hennessy and Longleaf is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Longleaf Partners Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Longleaf Partners go up and down completely randomly.
Pair Corralation between Hennessy Technology and Longleaf Partners
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 1.49 times more return on investment than Longleaf Partners. However, Hennessy Technology is 1.49 times more volatile than Longleaf Partners International. It trades about 0.2 of its potential returns per unit of risk. Longleaf Partners International is currently generating about -0.29 per unit of risk. If you would invest 2,274 in Hennessy Technology Fund on August 29, 2024 and sell it today you would earn a total of 138.00 from holding Hennessy Technology Fund or generate 6.07% 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. Longleaf Partners Internationa
Performance |
| Timeline |
| Hennessy Technology |
| Longleaf Partners |
Hennessy Technology and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Longleaf Partners
The main advantage of trading using opposite Hennessy Technology and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' 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 |
| Longleaf Partners vs. Longleaf Partners Global | Longleaf Partners vs. Longleaf Partners Fund | Longleaf Partners vs. Longleaf Partners Small Cap | Longleaf Partners vs. Vanguard Target Retirement |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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