Correlation Between Hennessy Focus and The Disciplined

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

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

Diversification Opportunities for Hennessy Focus and The Disciplined

0.89

Correlation Coefficient

Hennessy Focus  The Disciplined

Very poor diversification

The 3 months correlation between Hennessy and The is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Focus Fund and The Disciplined Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Disciplined Growth and Hennessy Focus 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 Focus Fund are associated (or correlated) with The Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Disciplined Growth has no effect on the direction of Hennessy Focus i.e., Hennessy Focus and The Disciplined go up and down completely randomly.

Pair Corralation between Hennessy Focus and The Disciplined

Assuming the 90 days horizon Hennessy Focus Fund is expected to generate 1.6 times more return on investment than The Disciplined. However, Hennessy Focus is 1.6 times more volatile than The Disciplined Growth. It trades about 0.24 of its potential returns per unit of risk. The Disciplined Growth is currently generating about 0.18 per unit of risk. If you would invest  4,353  in Hennessy Focus Fund on May 5, 2025 and sell it today you would earn a total of  999.00  from holding Hennessy Focus Fund or generate 22.95% return on investment over 90 days.

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

Hennessy Focus Fund  vs.  The Disciplined Growth

Hennessy Focus

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Focus Fund are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hennessy Focus showed solid returns over the last few months and may actually be approaching a breakup point.

The Disciplined Growth

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Disciplined Growth are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, The Disciplined may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Hennessy Focus and The Disciplined

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

The idea behind Hennessy Focus Fund and The Disciplined Growth 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.