Correlation Between Hennessy Technology and Inverse Nasdaq

Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Inverse Nasdaq 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 Inverse Nasdaq 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 Inverse Nasdaq 100 Strategy, you can compare the effects of market volatilities on Hennessy Technology and Inverse Nasdaq 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 Inverse Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Inverse Nasdaq.

Diversification Opportunities for Hennessy Technology and Inverse Nasdaq

0.0

Correlation Coefficient

Hennessy Technology  Inverse Nasdaq

Pay attention - limited upside

The 3 months correlation between Hennessy and Inverse is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Inverse Nasdaq 100 Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Nasdaq 100 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 Inverse Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Nasdaq 100 has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Inverse Nasdaq go up and down completely randomly.

Pair Corralation between Hennessy Technology and Inverse Nasdaq

If you would invest (100.00) in Inverse Nasdaq 100 Strategy on December 23, 2024 and sell it today you would earn a total of  100.00  from holding Inverse Nasdaq 100 Strategy or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Hennessy Technology Fund  vs.  Inverse Nasdaq 100 Strategy

Hennessy Technology

Risk-Adjusted Performance

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 latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Inverse Nasdaq 100

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inverse Nasdaq 100 Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Inverse Nasdaq 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 Inverse Nasdaq

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

The idea behind Hennessy Technology Fund and Inverse Nasdaq 100 Strategy 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.