Correlation Between FirstEnergy and Hennessy Gas
Can any of the company-specific risk be diversified away by investing in both FirstEnergy and Hennessy Gas 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 FirstEnergy and Hennessy Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstEnergy and Hennessy Gas Utility, you can compare the effects of market volatilities on FirstEnergy and Hennessy Gas 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 FirstEnergy with a short position of Hennessy Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstEnergy and Hennessy Gas.
Diversification Opportunities for FirstEnergy and Hennessy Gas
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FirstEnergy and Hennessy is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding FirstEnergy and Hennessy Gas Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Gas Utility and FirstEnergy 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 FirstEnergy are associated (or correlated) with Hennessy Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Gas Utility has no effect on the direction of FirstEnergy i.e., FirstEnergy and Hennessy Gas go up and down completely randomly.
Pair Corralation between FirstEnergy and Hennessy Gas
Allowing for the 90-day total investment horizon FirstEnergy is expected to generate 2.1 times less return on investment than Hennessy Gas. In addition to that, FirstEnergy is 1.3 times more volatile than Hennessy Gas Utility. It trades about 0.02 of its total potential returns per unit of risk. Hennessy Gas Utility is currently generating about 0.06 per unit of volatility. If you would invest 2,375 in Hennessy Gas Utility on August 31, 2024 and sell it today you would earn a total of 624.00 from holding Hennessy Gas Utility or generate 26.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstEnergy vs. Hennessy Gas Utility
Performance |
| Timeline |
| FirstEnergy |
| Hennessy Gas Utility |
FirstEnergy and Hennessy Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstEnergy and Hennessy Gas
The main advantage of trading using opposite FirstEnergy and Hennessy Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstEnergy position performs unexpectedly, Hennessy Gas 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 Gas will offset losses from the drop in Hennessy Gas' long position.| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
| Hennessy Gas vs. Artisan High Income | Hennessy Gas vs. Lord Abbett High | Hennessy Gas vs. Blackrock High Yield | Hennessy Gas vs. Msift High Yield |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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