Correlation Between Mh Elite and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both Mh Elite 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 Mh Elite and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mh Elite Select and Hennessy Technology Fund, you can compare the effects of market volatilities on Mh Elite 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 Mh Elite with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mh Elite and Hennessy Technology.
Diversification Opportunities for Mh Elite and Hennessy Technology
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between MHESX and Hennessy is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mh Elite Select and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Mh Elite 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 Mh Elite Select 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 Mh Elite i.e., Mh Elite and Hennessy Technology go up and down completely randomly.
Pair Corralation between Mh Elite and Hennessy Technology
Assuming the 90 days horizon Mh Elite Select is expected to generate 0.3 times more return on investment than Hennessy Technology. However, Mh Elite Select is 3.36 times less risky than Hennessy Technology. It trades about -0.03 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about -0.02 per unit of risk. If you would invest 582.00 in Mh Elite Select on September 12, 2024 and sell it today you would lose (2.00) from holding Mh Elite Select or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mh Elite Select vs. Hennessy Technology Fund
Performance |
| Timeline |
| Mh Elite Select |
| Hennessy Technology |
Mh Elite and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mh Elite and Hennessy Technology
The main advantage of trading using opposite Mh Elite and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mh Elite 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.| Mh Elite vs. Capital Income Builder | Mh Elite vs. Capital Income Builder | Mh Elite vs. Capital Income Builder | Mh Elite vs. Capital Income Builder |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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