Correlation Between Hennessy Small and Multi-index 2050

Can any of the company-specific risk be diversified away by investing in both Hennessy Small and Multi-index 2050 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 Multi-index 2050 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 Multi Index 2050 Lifetime, you can compare the effects of market volatilities on Hennessy Small and Multi-index 2050 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 Multi-index 2050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Small and Multi-index 2050.

Diversification Opportunities for Hennessy Small and Multi-index 2050

0.42

Correlation Coefficient

Hennessy Small  Multi-index 2050

Very weak diversification

The 3 months correlation between Hennessy and Multi-index is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap and Multi Index 2050 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2050 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 Multi-index 2050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2050 has no effect on the direction of Hennessy Small i.e., Hennessy Small and Multi-index 2050 go up and down completely randomly.

Pair Corralation between Hennessy Small and Multi-index 2050

Assuming the 90 days horizon Hennessy Small is expected to generate 1.19 times less return on investment than Multi-index 2050. In addition to that, Hennessy Small is 2.8 times more volatile than Multi Index 2050 Lifetime. It trades about 0.06 of its total potential returns per unit of risk. Multi Index 2050 Lifetime is currently generating about 0.2 per unit of volatility. If you would invest  1,616  in Multi Index 2050 Lifetime on August 5, 2025 and sell it today you would earn a total of  127.00  from holding Multi Index 2050 Lifetime or generate 7.86% return on investment over 90 days.

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

Hennessy Small Cap  vs.  Multi Index 2050 Lifetime

Hennessy Small Cap

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Small Cap are ranked lower than 4 (%) 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.

Multi Index 2050

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Index 2050 Lifetime are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multi-index 2050 may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Hennessy Small and Multi-index 2050

The main advantage of trading using opposite Hennessy Small and Multi-index 2050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Small position performs unexpectedly, Multi-index 2050 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 Multi-index 2050 will offset losses from the drop in Multi-index 2050's long position.

The idea behind Hennessy Small Cap and Multi Index 2050 Lifetime 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.