Correlation Between Hennessy Small and Balanced Fund

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

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

Diversification Opportunities for Hennessy Small and Balanced Fund

0.14

Correlation Coefficient

Hennessy Small  Balanced Fund

Average diversification

The 3 months correlation between Hennessy and Balanced is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap and Balanced Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Instit and Hennessy Small 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 Small Cap are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Instit has no effect on the direction of Hennessy Small i.e., Hennessy Small and Balanced Fund go up and down completely randomly.

Pair Corralation between Hennessy Small and Balanced Fund

Assuming the 90 days horizon Hennessy Small Cap is expected to generate 2.86 times more return on investment than Balanced Fund. However, Hennessy Small is 2.86 times more volatile than Balanced Fund Institutional. It trades about 0.05 of its potential returns per unit of risk. Balanced Fund Institutional is currently generating about 0.1 per unit of risk. If you would invest  1,914  in Hennessy Small Cap on August 2, 2025 and sell it today you would earn a total of  882.00  from holding Hennessy Small Cap or generate 46.08% return on investment over 90 days.

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

Hennessy Small Cap  vs.  Balanced Fund Institutional

Hennessy Small Cap

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hennessy Small may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Balanced Fund Instit

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Institutional are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Balanced Fund may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Hennessy Small and Balanced Fund

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

The idea behind Hennessy Small Cap and Balanced Fund Institutional 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.