Correlation Between Broad Capital and Hennessy Capital
Can any of the company-specific risk be diversified away by investing in both Broad Capital and Hennessy Capital 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 Broad Capital and Hennessy Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broad Capital Acquisition and Hennessy Capital Investment, you can compare the effects of market volatilities on Broad Capital and Hennessy Capital 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 Broad Capital with a short position of Hennessy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broad Capital and Hennessy Capital.
Diversification Opportunities for Broad Capital and Hennessy Capital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Broad and Hennessy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and Hennessy Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Capital Inv and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with Hennessy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Capital Inv has no effect on the direction of Broad Capital i.e., Broad Capital and Hennessy Capital go up and down completely randomly.
Pair Corralation between Broad Capital and Hennessy Capital
Given the investment horizon of 90 days Broad Capital is expected to generate 1.76 times less return on investment than Hennessy Capital. In addition to that, Broad Capital is 21.57 times more volatile than Hennessy Capital Investment. It trades about 0.01 of its total potential returns per unit of risk. Hennessy Capital Investment is currently generating about 0.27 per unit of volatility. If you would invest 1,058 in Hennessy Capital Investment on October 26, 2024 and sell it today you would earn a total of 7.00 from holding Hennessy Capital Investment or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Broad Capital Acquisition vs. Hennessy Capital Investment
Performance |
| Timeline |
| Broad Capital Acquisition |
| Hennessy Capital Inv |
Broad Capital and Hennessy Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broad Capital and Hennessy Capital
The main advantage of trading using opposite Broad Capital and Hennessy Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broad Capital position performs unexpectedly, Hennessy Capital 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 Capital will offset losses from the drop in Hennessy Capital's long position.| Broad Capital vs. Manaris Corp | Broad Capital vs. Alpha One | Broad Capital vs. AlphaTime Acquisition Corp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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