Correlation Between Vanguard Extended and Hennessy Focus
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and Hennessy Focus 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 Vanguard Extended and Hennessy Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and Hennessy Focus Fund, you can compare the effects of market volatilities on Vanguard Extended and Hennessy Focus 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 Vanguard Extended with a short position of Hennessy Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and Hennessy Focus.
Diversification Opportunities for Vanguard Extended and Hennessy Focus
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vanguard and Hennessy is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and Hennessy Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Focus and Vanguard Extended 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 Vanguard Extended Market are associated (or correlated) with Hennessy Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Focus has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and Hennessy Focus go up and down completely randomly.
Pair Corralation between Vanguard Extended and Hennessy Focus
Assuming the 90 days horizon Vanguard Extended Market is expected to generate 1.22 times more return on investment than Hennessy Focus. However, Vanguard Extended is 1.22 times more volatile than Hennessy Focus Fund. It trades about 0.32 of its potential returns per unit of risk. Hennessy Focus Fund is currently generating about 0.07 per unit of risk. If you would invest 34,752 in Vanguard Extended Market on August 29, 2024 and sell it today you would earn a total of 3,562 from holding Vanguard Extended Market or generate 10.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. Hennessy Focus Fund
Performance |
| Timeline |
| Vanguard Extended Market |
| Hennessy Focus |
Vanguard Extended and Hennessy Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and Hennessy Focus
The main advantage of trading using opposite Vanguard Extended and Hennessy Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, Hennessy Focus 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 Focus will offset losses from the drop in Hennessy Focus' long position.| Vanguard Extended vs. Goldman Sachs Mlp | Vanguard Extended vs. Ivy Natural Resources | Vanguard Extended vs. Icon Natural Resources | Vanguard Extended vs. Victory Global Natural |
| Hennessy Focus vs. T Rowe Price | Hennessy Focus vs. Blrc Sgy Mnp | Hennessy Focus vs. Rbc Bluebay Global | Hennessy Focus vs. Bbh Intermediate Municipal |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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