Correlation Between Hennessy Technology and Vanguard Pacific
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Vanguard Pacific 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 Vanguard Pacific 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 Vanguard Pacific Stock, you can compare the effects of market volatilities on Hennessy Technology and Vanguard Pacific 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 Vanguard Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Vanguard Pacific.
Diversification Opportunities for Hennessy Technology and Vanguard Pacific
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and Vanguard is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Vanguard Pacific Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Pacific Stock 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 Vanguard Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Pacific Stock has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Vanguard Pacific go up and down completely randomly.
Pair Corralation between Hennessy Technology and Vanguard Pacific
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 1.72 times more return on investment than Vanguard Pacific. However, Hennessy Technology is 1.72 times more volatile than Vanguard Pacific Stock. It trades about 0.16 of its potential returns per unit of risk. Vanguard Pacific Stock is currently generating about 0.02 per unit of risk. If you would invest 2,274 in Hennessy Technology Fund on August 28, 2024 and sell it today you would earn a total of 103.00 from holding Hennessy Technology Fund or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Vanguard Pacific Stock
Performance |
| Timeline |
| Hennessy Technology |
| Vanguard Pacific Stock |
Hennessy Technology and Vanguard Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Vanguard Pacific
The main advantage of trading using opposite Hennessy Technology and Vanguard Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Vanguard Pacific 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 Vanguard Pacific will offset losses from the drop in Vanguard Pacific'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 |
| Vanguard Pacific vs. Vanguard European Stock | Vanguard Pacific vs. Vanguard Emerging Markets | Vanguard Pacific vs. Vanguard Reit Index | Vanguard Pacific vs. Vanguard Developed Markets |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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