Correlation Between Hennessy Technology and Federated Ohio
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Federated Ohio 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 Federated Ohio 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 Federated Ohio Municipal, you can compare the effects of market volatilities on Hennessy Technology and Federated Ohio 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 Federated Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Federated Ohio.
Diversification Opportunities for Hennessy Technology and Federated Ohio
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hennessy and Federated is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Federated Ohio Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Ohio Municipal 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 Federated Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Ohio Municipal has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Federated Ohio go up and down completely randomly.
Pair Corralation between Hennessy Technology and Federated Ohio
Assuming the 90 days horizon Hennessy Technology Fund is expected to under-perform the Federated Ohio. In addition to that, Hennessy Technology is 10.19 times more volatile than Federated Ohio Municipal. It trades about -0.03 of its total potential returns per unit of risk. Federated Ohio Municipal is currently generating about 0.32 per unit of volatility. If you would invest 1,042 in Federated Ohio Municipal on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Federated Ohio Municipal or generate 1.06% 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. Federated Ohio Municipal
Performance |
| Timeline |
| Hennessy Technology |
| Federated Ohio Municipal |
Hennessy Technology and Federated Ohio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Federated Ohio
The main advantage of trading using opposite Hennessy Technology and Federated Ohio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Federated Ohio 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 Federated Ohio will offset losses from the drop in Federated Ohio'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 |
| Federated Ohio vs. Federated Emerging Market | Federated Ohio vs. Federated Mdt All | Federated Ohio vs. Federated Mdt Balanced | Federated Ohio vs. Federated Global Allocation |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |