Correlation Between Great-West Securefoundation and Hennessy Technology

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Can any of the company-specific risk be diversified away by investing in both Great-West Securefoundation 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 Great-West Securefoundation and Hennessy Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great-West Securefoundation Balanced and Hennessy Technology Fd, you can compare the effects of market volatilities on Great-West Securefoundation 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 Great-West Securefoundation with a short position of Hennessy Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great-West Securefoundation and Hennessy Technology.

Diversification Opportunities for Great-West Securefoundation and Hennessy Technology

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Great-West and Hennessy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Great-West Securefoundation Ba and Hennessy Technology Fd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Technology and Great-West Securefoundation 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 Great-West Securefoundation Balanced 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 Great-West Securefoundation i.e., Great-West Securefoundation and Hennessy Technology go up and down completely randomly.

Pair Corralation between Great-West Securefoundation and Hennessy Technology

Assuming the 90 days horizon Great-West Securefoundation Balanced is expected to generate 0.54 times more return on investment than Hennessy Technology. However, Great-West Securefoundation Balanced is 1.85 times less risky than Hennessy Technology. It trades about -0.02 of its potential returns per unit of risk. Hennessy Technology Fd is currently generating about -0.01 per unit of risk. If you would invest  1,128  in Great-West Securefoundation Balanced on September 1, 2022 and sell it today you would lose (34.00)  from holding Great-West Securefoundation Balanced or give up 3.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Great-West Securefoundation Ba  vs.  Hennessy Technology Fd

 Performance (%) 
       Timeline  
Great-West Securefoundation 
Great-West Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Great-West Securefoundation Balanced are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Great-West Securefoundation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Great-West Price Channel

Hennessy Technology 
Hennessy Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Technology Fd are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Hennessy Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hennessy Price Channel

Great-West Securefoundation and Hennessy Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Great-West Securefoundation and Hennessy Technology

The main advantage of trading using opposite Great-West Securefoundation and Hennessy Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great-West Securefoundation 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.
Great-West Securefoundation vs. American Balanced
The idea behind Great-West Securefoundation Balanced and Hennessy Technology Fd 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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