Correlation Between American Funds and Hennessy
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds The and Hennessy Bp Energy, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Hennessy.
Diversification Opportunities for American Funds and Hennessy
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Hennessy is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Funds The 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 American Funds 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 American Funds The 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 American Funds i.e., American Funds and Hennessy go up and down completely randomly.
Pair Corralation between American Funds and Hennessy
Assuming the 90 days horizon American Funds The is expected to generate 0.52 times more return on investment than Hennessy. However, American Funds The is 1.91 times less risky than Hennessy. It trades about 0.3 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about 0.08 per unit of risk. If you would invest 2,442 in American Funds The on November 3, 2024 and sell it today you would earn a total of 78.00 from holding American Funds The or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds The vs. Hennessy Bp Energy
Performance |
| Timeline |
| American Funds |
| Hennessy Bp Energy |
American Funds and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Hennessy
The main advantage of trading using opposite American Funds and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Fulcrum Diversified Absolute | American Funds vs. Delaware Limited Term Diversified | American Funds vs. Stone Ridge Diversified | American Funds vs. Lord Abbett Diversified |
| 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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