Correlation Between Hennessy Cornerstone and Qs Large

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

By analyzing existing cross correlation between Hennessy Nerstone Mid and Qs Large Cap, you can compare the effects of market volatilities on Hennessy Cornerstone and Qs Large 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 Cornerstone with a short position of Qs Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Qs Large.

Diversification Opportunities for Hennessy Cornerstone and Qs Large

0.69

Correlation Coefficient

Hennessy Cornerstone  Qs Large

Poor diversification

The 3 months correlation between Hennessy and LMUSX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Qs Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Large Cap and Hennessy Cornerstone 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 Nerstone Mid are associated (or correlated) with Qs Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Large Cap has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Qs Large go up and down completely randomly.

Pair Corralation between Hennessy Cornerstone and Qs Large

Assuming the 90 days horizon Hennessy Nerstone Mid is expected to under-perform the Qs Large. In addition to that, Hennessy Cornerstone is 1.2 times more volatile than Qs Large Cap. It trades about -0.38 of its total potential returns per unit of risk. Qs Large Cap is currently generating about -0.2 per unit of volatility. If you would invest  2,523  in Qs Large Cap on December 2, 2024 and sell it today you would lose (87.00) from holding Qs Large Cap or give up 3.45% of portfolio value over 90 days.

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

Hennessy Nerstone Mid  vs.  Qs Large Cap

Hennessy Nerstone Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hennessy Nerstone Mid has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Qs Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qs Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Hennessy Cornerstone and Qs Large

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

The idea behind Hennessy Nerstone Mid and Qs Large Cap 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.