Correlation Between VivoPower International and Hennessy Technology
Can any of the company-specific risk be diversified away by investing in both VivoPower International 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 VivoPower International and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VivoPower International PLC and Hennessy Technology Fund, you can compare the effects of market volatilities on VivoPower International 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 VivoPower International with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of VivoPower International and Hennessy Technology.
Diversification Opportunities for VivoPower International and Hennessy Technology
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VivoPower and Hennessy is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding VivoPower International PLC and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and VivoPower International 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 VivoPower International PLC 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 VivoPower International i.e., VivoPower International and Hennessy Technology go up and down completely randomly.
Pair Corralation between VivoPower International and Hennessy Technology
Given the investment horizon of 90 days VivoPower International PLC is expected to generate 13.69 times more return on investment than Hennessy Technology. However, VivoPower International is 13.69 times more volatile than Hennessy Technology Fund. It trades about 0.03 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about 0.08 per unit of risk. If you would invest 350.00 in VivoPower International PLC on September 2, 2024 and sell it today you would lose (232.00) from holding VivoPower International PLC or give up 66.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VivoPower International PLC vs. Hennessy Technology Fund
Performance |
| Timeline |
| VivoPower International |
| Hennessy Technology |
VivoPower International and Hennessy Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VivoPower International and Hennessy Technology
The main advantage of trading using opposite VivoPower International and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VivoPower International 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.| VivoPower International vs. Emeren Group | VivoPower International vs. Tigo Energy | VivoPower International vs. Sunrun Inc | VivoPower International vs. Sunnova Energy International |
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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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