Correlation Between Hennessy Technology and Multisector Bond
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Multisector Bond 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 Multisector Bond 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 Multisector Bond Sma, you can compare the effects of market volatilities on Hennessy Technology and Multisector Bond 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 Multisector Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Multisector Bond.
Diversification Opportunities for Hennessy Technology and Multisector Bond
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Multisector is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Multisector Bond Sma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multisector Bond Sma 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 Multisector Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multisector Bond Sma has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Multisector Bond go up and down completely randomly.
Pair Corralation between Hennessy Technology and Multisector Bond
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 3.27 times more return on investment than Multisector Bond. However, Hennessy Technology is 3.27 times more volatile than Multisector Bond Sma. It trades about 0.22 of its potential returns per unit of risk. Multisector Bond Sma is currently generating about 0.09 per unit of risk. If you would invest 2,304 in Hennessy Technology Fund on October 28, 2024 and sell it today you would earn a total of 99.00 from holding Hennessy Technology Fund or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Multisector Bond Sma
Performance |
| Timeline |
| Hennessy Technology |
| Multisector Bond Sma |
Hennessy Technology and Multisector Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Multisector Bond
The main advantage of trading using opposite Hennessy Technology and Multisector Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Multisector Bond 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 Multisector Bond will offset losses from the drop in Multisector Bond'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 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |