Correlation Between Hennessy Technology and Sp Midcap
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Sp Midcap 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 Sp Midcap 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 Sp Midcap Index, you can compare the effects of market volatilities on Hennessy Technology and Sp Midcap 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 Sp Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Sp Midcap.
Diversification Opportunities for Hennessy Technology and Sp Midcap
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and MIDKX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Sp Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap Index 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 Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap Index has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Sp Midcap go up and down completely randomly.
Pair Corralation between Hennessy Technology and Sp Midcap
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 0.57 times more return on investment than Sp Midcap. However, Hennessy Technology Fund is 1.76 times less risky than Sp Midcap. It trades about 0.28 of its potential returns per unit of risk. Sp Midcap Index is currently generating about -0.01 per unit of risk. If you would invest 2,228 in Hennessy Technology Fund on September 1, 2024 and sell it today you would earn a total of 168.00 from holding Hennessy Technology Fund or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Sp Midcap Index
Performance |
| Timeline |
| Hennessy Technology |
| Sp Midcap Index |
Hennessy Technology and Sp Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Sp Midcap
The main advantage of trading using opposite Hennessy Technology and Sp Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Sp Midcap 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 Sp Midcap will offset losses from the drop in Sp Midcap'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 |
| Sp Midcap vs. Allianzgi Technology Fund | Sp Midcap vs. Hennessy Technology Fund | Sp Midcap vs. Blackrock Science Technology | Sp Midcap vs. Icon Information Technology |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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