Correlation Between Cleartrack 2060 and Hennessy Technology

Can any of the company-specific risk be diversified away by investing in both Cleartrack 2060 and Hennessy Technology 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 Cleartrack 2060 and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cleartrack 2060 Class and Hennessy Technology Fund, you can compare the effects of market volatilities on Cleartrack 2060 and Hennessy Technology 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 Cleartrack 2060 with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleartrack 2060 and Hennessy Technology.

Diversification Opportunities for Cleartrack 2060 and Hennessy Technology

0.84

Correlation Coefficient

Cleartrack 2060  Hennessy Technology

Very poor diversification

The 3 months correlation between Cleartrack and Hennessy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cleartrack 2060 Class and Hennessy Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Cleartrack 2060 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 Cleartrack 2060 Class are associated (or correlated) with Hennessy Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Technology has no effect on the direction of Cleartrack 2060 i.e., Cleartrack 2060 and Hennessy Technology go up and down completely randomly.

Pair Corralation between Cleartrack 2060 and Hennessy Technology

Assuming the 90 days horizon Cleartrack 2060 Class is expected to generate 0.5 times more return on investment than Hennessy Technology. However, Cleartrack 2060 Class is 2.01 times less risky than Hennessy Technology. It trades about -0.03 of its potential returns per unit of risk. Hennessy Technology Fund is currently generating about -0.08 per unit of risk. If you would invest  1,138  in Cleartrack 2060 Class on December 2, 2024 and sell it today you would lose (16.00) from holding Cleartrack 2060 Class or give up 1.41% of portfolio value over 90 days.

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

Cleartrack 2060 Class  vs.  Hennessy Technology Fund

Cleartrack 2060 Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cleartrack 2060 Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Cleartrack 2060 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Cleartrack 2060 and Hennessy Technology

The main advantage of trading using opposite Cleartrack 2060 and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleartrack 2060 position performs unexpectedly, Hennessy Technology 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 Hennessy Technology will offset losses from the drop in Hennessy Technology's long position.

The idea behind Cleartrack 2060 Class and Hennessy Technology Fund 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.