Correlation Between Franklin Federal and Hennessy
Can any of the company-specific risk be diversified away by investing in both Franklin Federal 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 Franklin Federal and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Federal Tax Free and Hennessy Bp Energy, you can compare the effects of market volatilities on Franklin Federal 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 Franklin Federal with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Federal and Hennessy.
Diversification Opportunities for Franklin Federal and Hennessy
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Franklin and Hennessy is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Federal Tax Free 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 Franklin Federal 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 Franklin Federal Tax Free 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 Franklin Federal i.e., Franklin Federal and Hennessy go up and down completely randomly.
Pair Corralation between Franklin Federal and Hennessy
Assuming the 90 days horizon Franklin Federal Tax Free is expected to under-perform the Hennessy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Franklin Federal Tax Free is 4.33 times less risky than Hennessy. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Hennessy Bp Energy is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,735 in Hennessy Bp Energy on November 4, 2024 and sell it today you would earn a total of 27.00 from holding Hennessy Bp Energy or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Federal Tax Free vs. Hennessy Bp Energy
Performance |
| Timeline |
| Franklin Federal Tax |
| Hennessy Bp Energy |
Franklin Federal and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Federal and Hennessy
The main advantage of trading using opposite Franklin Federal and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Federal 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.| Franklin Federal vs. Fidelity Advisor Financial | Franklin Federal vs. Icon Financial Fund | Franklin Federal vs. Financial Industries Fund | Franklin Federal vs. Vanguard Financials Index |
| 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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