Correlation Between Hennessy Technology and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Beacon, you can compare the effects of market volatilities on Hennessy Technology and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Franklin Mutual.
Diversification Opportunities for Hennessy Technology and Franklin Mutual
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Franklin is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Franklin Mutual go up and down completely randomly.
Pair Corralation between Hennessy Technology and Franklin Mutual
Assuming the 90 days horizon Hennessy Technology is expected to generate 1.37 times less return on investment than Franklin Mutual. In addition to that, Hennessy Technology is 1.56 times more volatile than Franklin Mutual Beacon. It trades about 0.13 of its total potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.29 per unit of volatility. If you would invest 1,587 in Franklin Mutual Beacon on November 6, 2024 and sell it today you would earn a total of 64.00 from holding Franklin Mutual Beacon or generate 4.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Hennessy Technology |
| Franklin Mutual Beacon |
Hennessy Technology and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Franklin Mutual
The main advantage of trading using opposite Hennessy Technology and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual'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 |
| Franklin Mutual vs. Blrc Sgy Mnp | Franklin Mutual vs. Goldman Sachs Short | Franklin Mutual vs. Rbc Bluebay Emerging | Franklin Mutual vs. Artisan High Income |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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