Correlation Between Hennessy Technology and Al Frank
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Al Frank 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 Al Frank 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 Al Frank Fund, you can compare the effects of market volatilities on Hennessy Technology and Al Frank 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 Al Frank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Al Frank.
Diversification Opportunities for Hennessy Technology and Al Frank
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hennessy and VALAX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Al Frank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Frank Fund 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 Al Frank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Frank Fund has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Al Frank go up and down completely randomly.
Pair Corralation between Hennessy Technology and Al Frank
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 1.26 times more return on investment than Al Frank. However, Hennessy Technology is 1.26 times more volatile than Al Frank Fund. It trades about 0.07 of its potential returns per unit of risk. Al Frank Fund is currently generating about 0.04 per unit of risk. If you would invest 1,880 in Hennessy Technology Fund on September 15, 2024 and sell it today you would earn a total of 465.00 from holding Hennessy Technology Fund or generate 24.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Al Frank Fund
Performance |
| Timeline |
| Hennessy Technology |
| Al Frank Fund |
Hennessy Technology and Al Frank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Al Frank
The main advantage of trading using opposite Hennessy Technology and Al Frank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Al Frank 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 Al Frank will offset losses from the drop in Al Frank's long position.| Hennessy Technology vs. Veea Inc | Hennessy Technology vs. VivoPower International PLC | Hennessy Technology vs. Hennessy Nerstone Growth | Hennessy Technology vs. Hennessy Nerstone Value |
| Al Frank vs. Columbia Global Technology | Al Frank vs. Hennessy Technology Fund | Al Frank vs. Icon Information Technology | Al Frank vs. Red Oak 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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