Correlation Between Hennessy Technology and Sit Large
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Sit Large 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 Sit Large 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 Sit Large Cap, you can compare the effects of market volatilities on Hennessy Technology and Sit Large 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 Sit Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Sit Large.
Diversification Opportunities for Hennessy Technology and Sit Large
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Sit is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Sit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit Large Cap 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 Sit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Large Cap has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Sit Large go up and down completely randomly.
Pair Corralation between Hennessy Technology and Sit Large
Assuming the 90 days horizon Hennessy Technology is expected to generate 1.19 times less return on investment than Sit Large. In addition to that, Hennessy Technology is 1.23 times more volatile than Sit Large Cap. It trades about 0.07 of its total potential returns per unit of risk. Sit Large Cap is currently generating about 0.1 per unit of volatility. If you would invest 5,667 in Sit Large Cap on September 2, 2024 and sell it today you would earn a total of 2,257 from holding Sit Large Cap or generate 39.83% 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. Sit Large Cap
Performance |
| Timeline |
| Hennessy Technology |
| Sit Large Cap |
Hennessy Technology and Sit Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Sit Large
The main advantage of trading using opposite Hennessy Technology and Sit Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Sit Large 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 Sit Large will offset losses from the drop in Sit Large's long position.| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Firsthand Alternative Energy | Hennessy Technology vs. Aquagold International |
| Sit Large vs. Fidelity Small Cap | Sit Large vs. Fpa Queens Road | Sit Large vs. Royce Opportunity Fund | Sit Large vs. Ultramid Cap Profund Ultramid 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 Directory module to find actively traded commodities issued by global exchanges.
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