Correlation Between Hennessy Technology and Ivy Small
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Ivy Small 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 Ivy Small 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 Ivy Small Cap, you can compare the effects of market volatilities on Hennessy Technology and Ivy Small 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 Ivy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Ivy Small.
Diversification Opportunities for Hennessy Technology and Ivy Small
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Ivy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Ivy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Small Cap 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 Ivy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Small Cap has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Ivy Small go up and down completely randomly.
Pair Corralation between Hennessy Technology and Ivy Small
Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 0.95 times more return on investment than Ivy Small. However, Hennessy Technology Fund is 1.05 times less risky than Ivy Small. It trades about 0.09 of its potential returns per unit of risk. Ivy Small Cap is currently generating about 0.04 per unit of risk. If you would invest 2,078 in Hennessy Technology Fund on November 3, 2024 and sell it today you would earn a total of 314.00 from holding Hennessy Technology Fund or generate 15.11% 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. Ivy Small Cap
Performance |
| Timeline |
| Hennessy Technology |
| Ivy Small Cap |
Hennessy Technology and Ivy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Ivy Small
The main advantage of trading using opposite Hennessy Technology and Ivy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Ivy Small 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 Ivy Small will offset losses from the drop in Ivy Small'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 |
| Ivy Small vs. Dunham Large Cap | Ivy Small vs. Tiaa Cref Large Cap Value | Ivy Small vs. Fisher Large Cap | Ivy Small vs. Qs Large Cap |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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