Correlation Between Sp Midcap and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both Sp Midcap 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 Sp Midcap and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Midcap Index and Hennessy Technology Fund, you can compare the effects of market volatilities on Sp Midcap 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 Sp Midcap with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Hennessy Technology.
Diversification Opportunities for Sp Midcap and Hennessy Technology
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SPMIX and Hennessy is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Sp Midcap 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 Sp Midcap Index 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 Sp Midcap i.e., Sp Midcap and Hennessy Technology go up and down completely randomly.
Pair Corralation between Sp Midcap and Hennessy Technology
Assuming the 90 days horizon Sp Midcap is expected to generate 1.72 times less return on investment than Hennessy Technology. But when comparing it to its historical volatility, Sp Midcap Index is 1.13 times less risky than Hennessy Technology. It trades about 0.04 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,078 in Hennessy Technology Fund on September 14, 2024 and sell it today you would earn a total of 360.00 from holding Hennessy Technology Fund or generate 17.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Sp Midcap Index vs. Hennessy Technology Fund
Performance |
Timeline |
Sp Midcap Index |
Hennessy Technology |
Sp Midcap and Hennessy Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sp Midcap and Hennessy Technology
The main advantage of trading using opposite Sp Midcap and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Midcap 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.Sp Midcap vs. Cutler Equity | Sp Midcap vs. Us Strategic Equity | Sp Midcap vs. Ab Select Equity | Sp Midcap vs. Gmo Global Equity |
Hennessy Technology vs. Veea Inc | Hennessy Technology vs. VivoPower International PLC | Hennessy Technology vs. Hennessy Nerstone Growth | Hennessy Technology vs. Hennessy Nerstone Value |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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