Correlation Between Walden Equity and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both Walden Equity and Hennessy Cornerstone 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 Walden Equity and Hennessy Cornerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walden Equity Fund and Hennessy Nerstone Large, you can compare the effects of market volatilities on Walden Equity and Hennessy Cornerstone 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 Walden Equity with a short position of Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walden Equity and Hennessy Cornerstone.
Diversification Opportunities for Walden Equity and Hennessy Cornerstone
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Walden and Hennessy is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Walden Equity Fund and Hennessy Nerstone Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Large and Walden Equity 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 Walden Equity Fund are associated (or correlated) with Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Large has no effect on the direction of Walden Equity i.e., Walden Equity and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between Walden Equity and Hennessy Cornerstone
Assuming the 90 days horizon Walden Equity is expected to generate 1.1 times less return on investment than Hennessy Cornerstone. But when comparing it to its historical volatility, Walden Equity Fund is 1.32 times less risky than Hennessy Cornerstone. It trades about 0.07 of its potential returns per unit of risk. Hennessy Nerstone Large is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 981.00 in Hennessy Nerstone Large on September 3, 2024 and sell it today you would earn a total of 285.00 from holding Hennessy Nerstone Large or generate 29.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walden Equity Fund vs. Hennessy Nerstone Large
Performance |
| Timeline |
| Walden Equity |
| Hennessy Nerstone Large |
Walden Equity and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walden Equity and Hennessy Cornerstone
The main advantage of trading using opposite Walden Equity and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walden Equity position performs unexpectedly, Hennessy Cornerstone 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 Cornerstone will offset losses from the drop in Hennessy Cornerstone's long position.| Walden Equity vs. Walden Asset Management | Walden Equity vs. Calvert Large Cap | Walden Equity vs. Calvert Equity Portfolio | Walden Equity vs. Appleseed Fund Appleseed |
| Hennessy Cornerstone vs. Hennessy Nerstone Mid | Hennessy Cornerstone vs. Hennessy Nerstone Value | Hennessy Cornerstone vs. Hennessy Total Return | Hennessy Cornerstone vs. Walden Equity Fund |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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