Correlation Between Hennessy Technology and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Templeton Foreign 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 Templeton Foreign 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 Templeton Foreign Fund, you can compare the effects of market volatilities on Hennessy Technology and Templeton Foreign 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 Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Templeton Foreign.
Diversification Opportunities for Hennessy Technology and Templeton Foreign
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hennessy and Templeton is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Templeton Foreign go up and down completely randomly.
Pair Corralation between Hennessy Technology and Templeton Foreign
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 1.29 times more return on investment than Templeton Foreign. However, Hennessy Technology is 1.29 times more volatile than Templeton Foreign Fund. It trades about 0.2 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.17 per unit of risk. If you would invest 2,303 in Hennessy Technology Fund on October 24, 2024 and sell it today you would earn a total of 91.00 from holding Hennessy Technology Fund or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Templeton Foreign Fund
Performance |
| Timeline |
| Hennessy Technology |
| Templeton Foreign |
Hennessy Technology and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Templeton Foreign
The main advantage of trading using opposite Hennessy Technology and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign'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 |
| Templeton Foreign vs. Global Technology Portfolio | Templeton Foreign vs. Hennessy Technology Fund | Templeton Foreign vs. Towpath Technology | Templeton Foreign vs. Science Technology 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |