Correlation Between Hennessy Technology and Baron Focused
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Baron Focused 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 Technology and Baron Focused into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Technology Fund and Baron Focused Growth, you can compare the effects of market volatilities on Hennessy Technology and Baron Focused 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 Technology with a short position of Baron Focused. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Baron Focused.
Diversification Opportunities for Hennessy Technology and Baron Focused
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Baron is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Baron Focused Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Focused Growth and Hennessy Technology 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 Technology Fund are associated (or correlated) with Baron Focused. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Focused Growth has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Baron Focused go up and down completely randomly.
Pair Corralation between Hennessy Technology and Baron Focused
Assuming the 90 days horizon Hennessy Technology Fund is expected to under-perform the Baron Focused. In addition to that, Hennessy Technology is 1.2 times more volatile than Baron Focused Growth. It trades about -0.09 of its total potential returns per unit of risk. Baron Focused Growth is currently generating about -0.1 per unit of volatility. If you would invest 4,750 in Baron Focused Growth on December 28, 2024 and sell it today you would lose (364.00) from holding Baron Focused Growth or give up 7.66% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.36% |
Values | Daily Returns |
Hennessy Technology Fund vs. Baron Focused Growth
Performance |
Timeline |
Hennessy Technology |
Baron Focused Growth |
Hennessy Technology and Baron Focused Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hennessy Technology and Baron Focused
The main advantage of trading using opposite Hennessy Technology and Baron Focused positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Baron Focused 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 Baron Focused will offset losses from the drop in Baron Focused's long position.Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Large Cap | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Hennessy Small Cap |
Baron Focused vs. Fbjygx | Baron Focused vs. Aam Select Income | Baron Focused vs. Wabmsx | Baron Focused vs. Iaadx |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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