Correlation Between Hennessy Technology and Investment
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Investment 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 Investment 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 Investment Of America, you can compare the effects of market volatilities on Hennessy Technology and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Investment.
Diversification Opportunities for Hennessy Technology and Investment
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Investment is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Investment Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Of America 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Of America has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Investment go up and down completely randomly.
Pair Corralation between Hennessy Technology and Investment
Assuming the 90 days horizon Hennessy Technology Fund is expected to under-perform the Investment. In addition to that, Hennessy Technology is 2.96 times more volatile than Investment Of America. It trades about -0.03 of its total potential returns per unit of risk. Investment Of America is currently generating about 0.12 per unit of volatility. If you would invest 6,253 in Investment Of America on September 13, 2024 and sell it today you would earn a total of 90.00 from holding Investment Of America or generate 1.44% 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. Investment Of America
Performance |
| Timeline |
| Hennessy Technology |
| Investment Of America |
Hennessy Technology and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Investment
The main advantage of trading using opposite Hennessy Technology and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment'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 |
| Investment vs. Avantis Large Cap | Investment vs. Cb Large Cap | Investment vs. Dunham Large Cap | Investment vs. American Mutual 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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