Correlation Between Amg Yacktman and Hennessy Focus

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

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

Diversification Opportunities for Amg Yacktman and Hennessy Focus

0.43

Correlation Coefficient

Amg Yacktman  Hennessy Focus

Very weak diversification

The 3 months correlation between Amg and Hennessy is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Amg Yacktman Focused and Hennessy Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Focus and Amg Yacktman 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 Amg Yacktman Focused are associated (or correlated) with Hennessy Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Focus has no effect on the direction of Amg Yacktman i.e., Amg Yacktman and Hennessy Focus go up and down completely randomly.

Pair Corralation between Amg Yacktman and Hennessy Focus

Assuming the 90 days horizon Amg Yacktman is expected to generate 2.27 times less return on investment than Hennessy Focus. But when comparing it to its historical volatility, Amg Yacktman Focused is 2.84 times less risky than Hennessy Focus. It trades about 0.02 of its potential returns per unit of risk. Hennessy Focus Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,414  in Hennessy Focus Fund on September 15, 2024 and sell it today you would earn a total of  102.00  from holding Hennessy Focus Fund or generate 2.31% return on investment over 90 days.

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

Amg Yacktman Focused  vs.  Hennessy Focus Fund

Amg Yacktman Focused

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hennessy Focus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hennessy Focus Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Amg Yacktman and Hennessy Focus

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

The idea behind Amg Yacktman Focused and Hennessy Focus 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.