Correlation Between Praxis Genesis and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both Praxis Genesis and Hennessy 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 Praxis Genesis and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Praxis Genesis Balanced and Hennessy Technology Fund, you can compare the effects of market volatilities on Praxis Genesis and Hennessy 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 Praxis Genesis with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Praxis Genesis and Hennessy Technology.
Diversification Opportunities for Praxis Genesis and Hennessy Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Praxis and Hennessy is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Praxis Genesis Balanced and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Praxis Genesis 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 Praxis Genesis Balanced are associated (or correlated) with Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of Praxis Genesis i.e., Praxis Genesis and Hennessy Technology go up and down completely randomly.
Pair Corralation between Praxis Genesis and Hennessy Technology
Assuming the 90 days horizon Praxis Genesis Balanced is expected to generate 0.4 times more return on investment than Hennessy Technology. However, Praxis Genesis Balanced is 2.53 times less risky than Hennessy Technology. It trades about -0.02 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about -0.04 per unit of risk. If you would invest 1,556 in Praxis Genesis Balanced on January 14, 2025 and sell it today you would lose (54.00) from holding Praxis Genesis Balanced or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
Praxis Genesis Balanced vs. Hennessy Technology Fund
Performance |
| Timeline |
| Praxis Genesis Balanced |
| Hennessy Technology |
Praxis Genesis and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Praxis Genesis and Hennessy Technology
The main advantage of trading using opposite Praxis Genesis and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Praxis Genesis position performs unexpectedly, Hennessy 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 Hennessy Technology will offset losses from the drop in Hennessy Technology's long position.| Praxis Genesis vs. Praxis Growth Index | Praxis Genesis vs. Praxis Small Cap | Praxis Genesis vs. Praxis Small Cap | Praxis Genesis vs. Praxis International Index |
| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Large Cap | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Hennessy Small 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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