Correlation Between Hennessy Technology and Prudential Short
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Prudential Short 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 Prudential Short 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 Prudential Short Term Porate, you can compare the effects of market volatilities on Hennessy Technology and Prudential Short 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 Prudential Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Prudential Short.
Diversification Opportunities for Hennessy Technology and Prudential Short
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and Prudential is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Prudential Short Term Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Short Term 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 Prudential Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Short Term has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Prudential Short go up and down completely randomly.
Pair Corralation between Hennessy Technology and Prudential Short
Assuming the 90 days horizon Hennessy Technology Fund is expected to under-perform the Prudential Short. In addition to that, Hennessy Technology is 15.85 times more volatile than Prudential Short Term Porate. It trades about -0.12 of its total potential returns per unit of risk. Prudential Short Term Porate is currently generating about 0.02 per unit of volatility. If you would invest 1,067 in Prudential Short Term Porate on January 17, 2025 and sell it today you would earn a total of 1.00 from holding Prudential Short Term Porate or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Prudential Short Term Porate
Performance |
| Timeline |
| Hennessy Technology |
| Prudential Short Term |
Hennessy Technology and Prudential Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Prudential Short
The main advantage of trading using opposite Hennessy Technology and Prudential Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Prudential Short 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 Prudential Short will offset losses from the drop in Prudential Short'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 |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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