Correlation Between Baird Smallcap and Hennessy
Can any of the company-specific risk be diversified away by investing in both Baird Smallcap and Hennessy 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 Baird Smallcap and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baird Smallcap Value and Hennessy Bp Energy, you can compare the effects of market volatilities on Baird Smallcap and Hennessy 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 Baird Smallcap with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baird Smallcap and Hennessy.
Diversification Opportunities for Baird Smallcap and Hennessy
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Baird and Hennessy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Baird Smallcap Value and Hennessy Bp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Energy and Baird Smallcap 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 Baird Smallcap Value are associated (or correlated) with Hennessy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Bp Energy has no effect on the direction of Baird Smallcap i.e., Baird Smallcap and Hennessy go up and down completely randomly.
Pair Corralation between Baird Smallcap and Hennessy
Assuming the 90 days horizon Baird Smallcap Value is expected to generate 0.99 times more return on investment than Hennessy. However, Baird Smallcap Value is 1.01 times less risky than Hennessy. It trades about 0.18 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about -0.05 per unit of risk. If you would invest 1,654 in Baird Smallcap Value on September 13, 2024 and sell it today you would earn a total of 58.00 from holding Baird Smallcap Value or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baird Smallcap Value vs. Hennessy Bp Energy
Performance |
| Timeline |
| Baird Smallcap Value |
| Hennessy Bp Energy |
Baird Smallcap and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baird Smallcap and Hennessy
The main advantage of trading using opposite Baird Smallcap and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baird Smallcap position performs unexpectedly, Hennessy 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 will offset losses from the drop in Hennessy's long position.| Baird Smallcap vs. Baird Aggregate Bond | Baird Smallcap vs. Baird Aggregate Bond | Baird Smallcap vs. Baird Short Term Bond | Baird Smallcap vs. Baird Short Term Bond |
| Hennessy vs. World Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class | Hennessy vs. Fidelity Advisor Energy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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