Correlation Between Barings Global and Hennessy
Can any of the company-specific risk be diversified away by investing in both Barings Global 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 Barings Global and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Global Floating and Hennessy Bp Midstream, you can compare the effects of market volatilities on Barings Global 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 Barings Global with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Global and Hennessy.
Diversification Opportunities for Barings Global and Hennessy
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barings and Hennessy is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barings Global Floating and Hennessy Bp Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Midstream and Barings Global 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 Barings Global Floating 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 Midstream has no effect on the direction of Barings Global i.e., Barings Global and Hennessy go up and down completely randomly.
Pair Corralation between Barings Global and Hennessy
Assuming the 90 days horizon Barings Global Floating is expected to generate 0.07 times more return on investment than Hennessy. However, Barings Global Floating is 14.05 times less risky than Hennessy. It trades about -0.26 of its potential returns per unit of risk. Hennessy Bp Midstream is currently generating about -0.03 per unit of risk. If you would invest 879.00 in Barings Global Floating on October 7, 2024 and sell it today you would lose (4.00) from holding Barings Global Floating or give up 0.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Global Floating vs. Hennessy Bp Midstream
Performance |
| Timeline |
| Barings Global Floating |
| Hennessy Bp Midstream |
Barings Global and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Global and Hennessy
The main advantage of trading using opposite Barings Global and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Global 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.| Barings Global vs. HUMANA INC | Barings Global vs. Aquagold International | Barings Global vs. Barloworld Ltd ADR | Barings Global vs. Thrivent High Yield |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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