Correlation Between Hennessy Technology and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Templeton Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Hennessy Technology and Templeton Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Templeton Emerging.
Diversification Opportunities for Hennessy Technology and Templeton Emerging
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hennessy and Templeton is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Templeton Emerging go up and down completely randomly.
Pair Corralation between Hennessy Technology and Templeton Emerging
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 2.71 times more return on investment than Templeton Emerging. However, Hennessy Technology is 2.71 times more volatile than Templeton Emerging Markets. It trades about 0.17 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about -0.19 per unit of risk. If you would invest 2,277 in Hennessy Technology Fund on August 31, 2024 and sell it today you would earn a total of 119.00 from holding Hennessy Technology Fund or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Templeton Emerging Markets
Performance |
| Timeline |
| Hennessy Technology |
| Templeton Emerging |
Hennessy Technology and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Templeton Emerging
The main advantage of trading using opposite Hennessy Technology and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging'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 Emerging vs. Hennessy Technology Fund | Templeton Emerging vs. Mfs Technology Fund | Templeton Emerging vs. Technology Ultrasector Profund | Templeton Emerging vs. Janus Global Technology |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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