Correlation Between Hennessy Technology and Mh Elite
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Mh Elite 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 Mh Elite 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 Mh Elite Select, you can compare the effects of market volatilities on Hennessy Technology and Mh Elite 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 Mh Elite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Mh Elite.
Diversification Opportunities for Hennessy Technology and Mh Elite
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hennessy and MHESX is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Mh Elite Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mh Elite Select 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 Mh Elite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mh Elite Select has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Mh Elite go up and down completely randomly.
Pair Corralation between Hennessy Technology and Mh Elite
Assuming the 90 days horizon Hennessy Technology Fund is expected to under-perform the Mh Elite. In addition to that, Hennessy Technology is 3.36 times more volatile than Mh Elite Select. It trades about -0.02 of its total potential returns per unit of risk. Mh Elite Select is currently generating about -0.03 per unit of volatility. If you would invest 582.00 in Mh Elite Select on September 12, 2024 and sell it today you would lose (2.00) from holding Mh Elite Select or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Mh Elite Select
Performance |
| Timeline |
| Hennessy Technology |
| Mh Elite Select |
Hennessy Technology and Mh Elite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Mh Elite
The main advantage of trading using opposite Hennessy Technology and Mh Elite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Mh Elite 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 Mh Elite will offset losses from the drop in Mh Elite's long position.The idea behind Hennessy Technology Fund and Mh Elite Select pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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