Correlation Between Small Company and Hennessy Cornerstone
Can any of the company-specific risk be diversified away by investing in both Small Company and Hennessy Cornerstone 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 Small Company and Hennessy Cornerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Company Stock Fund and Hennessy Nerstone Mid, you can compare the effects of market volatilities on Small Company and Hennessy Cornerstone 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 Small Company with a short position of Hennessy Cornerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Company and Hennessy Cornerstone.
Diversification Opportunities for Small Company and Hennessy Cornerstone
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small and Hennessy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Small Company Stock Fund and Hennessy Nerstone Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Mid and Small Company 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 Small Company Stock Fund are associated (or correlated) with Hennessy Cornerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Mid has no effect on the direction of Small Company i.e., Small Company and Hennessy Cornerstone go up and down completely randomly.
Pair Corralation between Small Company and Hennessy Cornerstone
Assuming the 90 days horizon Small Company is expected to generate 1.02 times less return on investment than Hennessy Cornerstone. But when comparing it to its historical volatility, Small Company Stock Fund is 1.09 times less risky than Hennessy Cornerstone. It trades about 0.13 of its potential returns per unit of risk. Hennessy Nerstone Mid is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,103 in Hennessy Nerstone Mid on May 31, 2025 and sell it today you would earn a total of 194.00 from holding Hennessy Nerstone Mid or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
Small Company Stock Fund vs. Hennessy Nerstone Mid
Performance |
| Timeline |
| Small Stock Fund |
| Hennessy Nerstone Mid |
Small Company and Hennessy Cornerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Company and Hennessy Cornerstone
The main advantage of trading using opposite Small Company and Hennessy Cornerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company position performs unexpectedly, Hennessy Cornerstone 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 Cornerstone will offset losses from the drop in Hennessy Cornerstone's long position.| Small Company vs. L Abbett Growth | Small Company vs. Semiconductor Ultrasector Profund | Small Company vs. Qs Global Equity | Small Company vs. Rbb Fund |
| Hennessy Cornerstone vs. Boston Partners All Cap | Hennessy Cornerstone vs. Eventide Gilead Fund | Hennessy Cornerstone vs. Large Cap Core | Hennessy Cornerstone vs. Hennessy Focus Fund |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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