Correlation Between Hennessy Total and Heartland Value

Can any of the company-specific risk be diversified away by investing in both Hennessy Total and Heartland Value 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 Hennessy Total and Heartland Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hennessy Total Return and Heartland Value Fund, you can compare the effects of market volatilities on Hennessy Total and Heartland Value 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 Hennessy Total with a short position of Heartland Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Total and Heartland Value.

Diversification Opportunities for Hennessy Total and Heartland Value

-0.3

Correlation Coefficient

Hennessy Total  Heartland Value

Very good diversification

The 3 months correlation between Hennessy and Heartland is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Total Return and Heartland Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Value and Hennessy Total 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 Hennessy Total Return are associated (or correlated) with Heartland Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Value has no effect on the direction of Hennessy Total i.e., Hennessy Total and Heartland Value go up and down completely randomly.

Pair Corralation between Hennessy Total and Heartland Value

Assuming the 90 days horizon Hennessy Total Return is expected to under-perform the Heartland Value. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hennessy Total Return is 2.26 times less risky than Heartland Value. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Heartland Value Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5,023  in Heartland Value Fund on September 14, 2024 and sell it today you would earn a total of  485.00  from holding Heartland Value Fund or generate 9.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hennessy Total Return  vs.  Heartland Value Fund

Hennessy Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hennessy Total Return has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Hennessy Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Heartland Value

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Value Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Heartland Value may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hennessy Total and Heartland Value

The main advantage of trading using opposite Hennessy Total and Heartland Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Total position performs unexpectedly, Heartland Value 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 Heartland Value will offset losses from the drop in Heartland Value's long position.

The idea behind Hennessy Total Return and Heartland Value Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.