Correlation Between Hennessy Technology and Pro Blend
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Pro Blend 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 Pro Blend 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 Pro Blend Maximum Term, you can compare the effects of market volatilities on Hennessy Technology and Pro Blend 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 Pro Blend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Pro Blend.
Diversification Opportunities for Hennessy Technology and Pro Blend
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Pro is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Pro Blend Maximum Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro Blend Maximum 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 Pro Blend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro Blend Maximum has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Pro Blend go up and down completely randomly.
Pair Corralation between Hennessy Technology and Pro Blend
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 1.81 times more return on investment than Pro Blend. However, Hennessy Technology is 1.81 times more volatile than Pro Blend Maximum Term. It trades about 0.09 of its potential returns per unit of risk. Pro Blend Maximum Term is currently generating about 0.08 per unit of risk. If you would invest 1,469 in Hennessy Technology Fund on September 14, 2024 and sell it today you would earn a total of 910.00 from holding Hennessy Technology Fund or generate 61.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Pro Blend Maximum Term
Performance |
| Timeline |
| Hennessy Technology |
| Pro Blend Maximum |
Hennessy Technology and Pro Blend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Pro Blend
The main advantage of trading using opposite Hennessy Technology and Pro Blend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Pro Blend 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 Pro Blend will offset losses from the drop in Pro Blend'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 |
| Pro Blend vs. Red Oak Technology | Pro Blend vs. Allianzgi Technology Fund | Pro Blend vs. Invesco Technology Fund | Pro Blend 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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