Correlation Between Hennessy Technology and Science Technology
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Science Technology 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 Science Technology 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 Science Technology Fund, you can compare the effects of market volatilities on Hennessy Technology and Science Technology 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 Science Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Science Technology.
Diversification Opportunities for Hennessy Technology and Science Technology
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and SCIENCE is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Science Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Technology 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 Science Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Technology has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Science Technology go up and down completely randomly.
Pair Corralation between Hennessy Technology and Science Technology
Assuming the 90 days horizon Hennessy Technology is expected to generate 1.27 times less return on investment than Science Technology. But when comparing it to its historical volatility, Hennessy Technology Fund is 1.08 times less risky than Science Technology. It trades about 0.08 of its potential returns per unit of risk. Science Technology Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,810 in Science Technology Fund on September 2, 2024 and sell it today you would earn a total of 1,284 from holding Science Technology Fund or generate 70.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Science Technology Fund
Performance |
| Timeline |
| Hennessy Technology |
| Science Technology |
Hennessy Technology and Science Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Science Technology
The main advantage of trading using opposite Hennessy Technology and Science Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Science Technology 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 Science Technology will offset losses from the drop in Science Technology'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 |
| Science Technology vs. Aggressive Growth Fund | Science Technology vs. Sp 500 Index | Science Technology vs. Nasdaq 100 Index Fund | Science Technology vs. International Fund International |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| 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 | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |