Correlation Between Hennessy Technology and Vy(r) Invesco

Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Vy(r) Invesco 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 Vy(r) Invesco 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 Vy Invesco Equity, you can compare the effects of market volatilities on Hennessy Technology and Vy(r) Invesco 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 Vy(r) Invesco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Vy(r) Invesco.

Diversification Opportunities for Hennessy Technology and Vy(r) Invesco

0.79

Correlation Coefficient

Hennessy Technology  Vy(r) Invesco

Poor diversification

The 3 months correlation between Hennessy and Vy(r) is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Vy Invesco Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vy Invesco Equity 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 Vy(r) Invesco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vy Invesco Equity has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Vy(r) Invesco go up and down completely randomly.

Pair Corralation between Hennessy Technology and Vy(r) Invesco

Assuming the 90 days horizon Hennessy Technology Fund is expected to generate 1.17 times more return on investment than Vy(r) Invesco. However, Hennessy Technology is 1.17 times more volatile than Vy Invesco Equity. It trades about -0.11 of its potential returns per unit of risk. Vy Invesco Equity is currently generating about -0.27 per unit of risk. If you would invest  2,355  in Hennessy Technology Fund on October 11, 2024 and sell it today you would lose (65.00) from holding Hennessy Technology Fund or give up 2.76% of portfolio value over 90 days.

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

Hennessy Technology Fund  vs.  Vy Invesco Equity

Hennessy Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vy Invesco Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vy Invesco Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Vy(r) Invesco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hennessy Technology and Vy(r) Invesco

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

The idea behind Hennessy Technology Fund and Vy Invesco Equity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.