Correlation Between Delaware Extended and Hennessy
Can any of the company-specific risk be diversified away by investing in both Delaware Extended 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 Delaware Extended and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delaware Extended Duration and Hennessy Bp Energy, you can compare the effects of market volatilities on Delaware Extended 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 Delaware Extended with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delaware Extended and Hennessy.
Diversification Opportunities for Delaware Extended and Hennessy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delaware and Hennessy is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Delaware Extended Duration 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 Delaware Extended 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 Delaware Extended Duration 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 Delaware Extended i.e., Delaware Extended and Hennessy go up and down completely randomly.
Pair Corralation between Delaware Extended and Hennessy
Assuming the 90 days horizon Delaware Extended Duration is expected to generate 0.7 times more return on investment than Hennessy. However, Delaware Extended Duration is 1.42 times less risky than Hennessy. It trades about 0.02 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about -0.07 per unit of risk. If you would invest 1,455 in Delaware Extended Duration on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Delaware Extended Duration or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delaware Extended Duration vs. Hennessy Bp Energy
Performance |
| Timeline |
| Delaware Extended |
| Hennessy Bp Energy |
Delaware Extended and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delaware Extended and Hennessy
The main advantage of trading using opposite Delaware Extended and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delaware Extended 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.| Delaware Extended vs. Hennessy Bp Energy | Delaware Extended vs. Icon Natural Resources | Delaware Extended vs. World Energy Fund | Delaware Extended vs. Dreyfus Natural Resources |
| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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