Correlation Between Mfs Value and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both Mfs Value 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 Mfs Value and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mfs Value Fund and Hennessy Technology Fund, you can compare the effects of market volatilities on Mfs Value 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 Mfs Value with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mfs Value and Hennessy Technology.
Diversification Opportunities for Mfs Value and Hennessy Technology
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Mfs and Hennessy is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Mfs Value Fund and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Mfs Value 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 Mfs Value Fund 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 Mfs Value i.e., Mfs Value and Hennessy Technology go up and down completely randomly.
Pair Corralation between Mfs Value and Hennessy Technology
Assuming the 90 days horizon Mfs Value is expected to generate 1.17 times less return on investment than Hennessy Technology. But when comparing it to its historical volatility, Mfs Value Fund is 1.87 times less risky than Hennessy Technology. It trades about 0.11 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,826 in Hennessy Technology Fund on September 2, 2024 and sell it today you would earn a total of 570.00 from holding Hennessy Technology Fund or generate 31.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mfs Value Fund vs. Hennessy Technology Fund
Performance |
| Timeline |
| Mfs Value Fund |
| Hennessy Technology |
Mfs Value and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mfs Value and Hennessy Technology
The main advantage of trading using opposite Mfs Value and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mfs Value 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.| Mfs Value vs. Davis Financial Fund | Mfs Value vs. Davis Financial Fund | Mfs Value vs. Prudential Jennison Financial | Mfs Value vs. John Hancock Financial |
| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Firsthand Alternative Energy | Hennessy Technology vs. Aquagold 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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