Correlation Between Hennessy Technology and Red Oak
Can any of the company-specific risk be diversified away by investing in both Hennessy Technology and Red Oak 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 Red Oak 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 Red Oak Technology, you can compare the effects of market volatilities on Hennessy Technology and Red Oak 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 Red Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Technology and Red Oak.
Diversification Opportunities for Hennessy Technology and Red Oak
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Red is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Technology Fund and Red Oak Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Oak Technology 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 Red Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Oak Technology has no effect on the direction of Hennessy Technology i.e., Hennessy Technology and Red Oak go up and down completely randomly.
Pair Corralation between Hennessy Technology and Red Oak
Assuming the 90 days horizon Hennessy Technology is expected to generate 1.12 times less return on investment than Red Oak. In addition to that, Hennessy Technology is 1.16 times more volatile than Red Oak Technology. It trades about 0.3 of its total potential returns per unit of risk. Red Oak Technology is currently generating about 0.39 per unit of volatility. If you would invest 3,985 in Red Oak Technology on April 17, 2025 and sell it today you would earn a total of 1,220 from holding Red Oak Technology or generate 30.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Technology Fund vs. Red Oak Technology
Performance |
| Timeline |
| Hennessy Technology |
| Red Oak Technology |
Hennessy Technology and Red Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Technology and Red Oak
The main advantage of trading using opposite Hennessy Technology and Red Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Technology position performs unexpectedly, Red Oak 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 Red Oak will offset losses from the drop in Red Oak's long position.| Hennessy Technology vs. Black Oak Emerging | Hennessy Technology vs. Hennessy Large Cap | Hennessy Technology vs. Hennessy Japan Fund | Hennessy Technology vs. Hennessy Small Cap |
| Red Oak vs. Pin Oak Equity | Red Oak vs. White Oak Select | Red Oak vs. Black Oak Emerging | Red Oak vs. Berkshire Focus |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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