Correlation Between Hennessy Japan and Leland Thomson
Can any of the company-specific risk be diversified away by investing in both Hennessy Japan and Leland Thomson 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 Japan and Leland Thomson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Japan Fund and Leland Thomson Reuters, you can compare the effects of market volatilities on Hennessy Japan and Leland Thomson 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 Japan with a short position of Leland Thomson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Japan and Leland Thomson.
Diversification Opportunities for Hennessy Japan and Leland Thomson
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and Leland is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Japan Fund and Leland Thomson Reuters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leland Thomson Reuters and Hennessy Japan 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 Japan Fund are associated (or correlated) with Leland Thomson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leland Thomson Reuters has no effect on the direction of Hennessy Japan i.e., Hennessy Japan and Leland Thomson go up and down completely randomly.
Pair Corralation between Hennessy Japan and Leland Thomson
Assuming the 90 days horizon Hennessy Japan Fund is expected to generate 0.55 times more return on investment than Leland Thomson. However, Hennessy Japan Fund is 1.82 times less risky than Leland Thomson. It trades about -0.11 of its potential returns per unit of risk. Leland Thomson Reuters is currently generating about -0.07 per unit of risk. If you would invest 4,572 in Hennessy Japan Fund on December 5, 2024 and sell it today you would lose (312.00) from holding Hennessy Japan Fund or give up 6.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hennessy Japan Fund vs. Leland Thomson Reuters
Performance |
Timeline |
Hennessy Japan |
Leland Thomson Reuters |
Hennessy Japan and Leland Thomson Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hennessy Japan and Leland Thomson
The main advantage of trading using opposite Hennessy Japan and Leland Thomson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Japan position performs unexpectedly, Leland Thomson 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 Leland Thomson will offset losses from the drop in Leland Thomson's long position.Hennessy Japan vs. Hennessy Japan Fund | Hennessy Japan vs. Hennessy Japan Small | Hennessy Japan vs. Matthews Japan Fund | Hennessy Japan vs. Matthews India Fund |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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