Correlation Between Aquila Tax-free and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both Aquila Tax-free 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 Aquila Tax-free and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquila Tax Free Trust and Hennessy Technology Fund, you can compare the effects of market volatilities on Aquila Tax-free 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 Aquila Tax-free with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquila Tax-free and Hennessy Technology.
Diversification Opportunities for Aquila Tax-free and Hennessy Technology
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aquila and Hennessy is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aquila Tax Free Trust and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Aquila Tax-free 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 Aquila Tax Free Trust 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 Aquila Tax-free i.e., Aquila Tax-free and Hennessy Technology go up and down completely randomly.
Pair Corralation between Aquila Tax-free and Hennessy Technology
Assuming the 90 days horizon Aquila Tax-free is expected to generate 8.86 times less return on investment than Hennessy Technology. But when comparing it to its historical volatility, Aquila Tax Free Trust is 5.81 times less risky than Hennessy Technology. It trades about 0.13 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,274 in Hennessy Technology Fund on August 29, 2024 and sell it today you would earn a total of 138.00 from holding Hennessy Technology Fund or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aquila Tax Free Trust vs. Hennessy Technology Fund
Performance |
| Timeline |
| Aquila Tax Free |
| Hennessy Technology |
Aquila Tax-free and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquila Tax-free and Hennessy Technology
The main advantage of trading using opposite Aquila Tax-free and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquila Tax-free 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.| Aquila Tax-free vs. Hennessy Technology Fund | Aquila Tax-free vs. Columbia Global Technology | Aquila Tax-free vs. Fidelity Advisor Technology | Aquila Tax-free vs. Towpath Technology |
| 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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