Correlation Between Hennessy Technology and Global Infrastructure
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Global Infrastructure 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 Global Infrastructure 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 Global Infrastructure Fund, you can compare the effects of market volatilities on Hennessy Technology and Global Infrastructure 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 Global Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Global Infrastructure.
Diversification Opportunities for Hennessy Technology and Global Infrastructure
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Global is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Global Infrastructure Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Infrastructure 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 Global Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Infrastructure has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Global Infrastructure go up and down completely randomly.
Pair Corralation between Hennessy Technology and Global Infrastructure
Assuming the 90 days horizon Hennessy Technology Fund is expected to under-perform the Global Infrastructure. In addition to that, Hennessy Technology is 2.47 times more volatile than Global Infrastructure Fund. It trades about -0.26 of its total potential returns per unit of risk. Global Infrastructure Fund is currently generating about 0.1 per unit of volatility. If you would invest 923.00 in Global Infrastructure Fund on December 4, 2024 and sell it today you would earn a total of 11.00 from holding Global Infrastructure Fund or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Global Infrastructure Fund
Performance |
| Timeline |
| Hennessy Technology |
| Global Infrastructure |
Hennessy Technology and Global Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Global Infrastructure
The main advantage of trading using opposite Hennessy Technology and Global Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Global Infrastructure 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 Global Infrastructure will offset losses from the drop in Global Infrastructure'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 |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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