Correlation Between Hennessy Technology and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Sterling Capital 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 Sterling Capital 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 Sterling Capital Stratton, you can compare the effects of market volatilities on Hennessy Technology and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Sterling Capital.
Diversification Opportunities for Hennessy Technology and Sterling Capital
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Sterling is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Sterling Capital Stratton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Stratton 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Stratton has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Sterling Capital go up and down completely randomly.
Pair Corralation between Hennessy Technology and Sterling Capital
Assuming the 90 days horizon Hennessy Technology is expected to generate 1.38 times less return on investment than Sterling Capital. In addition to that, Hennessy Technology is 1.04 times more volatile than Sterling Capital Stratton. It trades about 0.08 of its total potential returns per unit of risk. Sterling Capital Stratton is currently generating about 0.11 per unit of volatility. If you would invest 4,361 in Sterling Capital Stratton on September 1, 2024 and sell it today you would earn a total of 806.00 from holding Sterling Capital Stratton or generate 18.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Sterling Capital Stratton
Performance |
| Timeline |
| Hennessy Technology |
| Sterling Capital Stratton |
Hennessy Technology and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Sterling Capital
The main advantage of trading using opposite Hennessy Technology and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital'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 |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |