Correlation Between Hennessy Capital and ARYA Sciences
Can any of the company-specific risk be diversified away by investing in both Hennessy Capital and ARYA Sciences 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 Hennessy Capital and ARYA Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Capital Investment and ARYA Sciences Acquisition, you can compare the effects of market volatilities on Hennessy Capital and ARYA Sciences 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 Hennessy Capital with a short position of ARYA Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Capital and ARYA Sciences.
Diversification Opportunities for Hennessy Capital and ARYA Sciences
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hennessy and ARYA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Capital Investment and ARYA Sciences Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARYA Sciences Acquisition and Hennessy Capital 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 Hennessy Capital Investment are associated (or correlated) with ARYA Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARYA Sciences Acquisition has no effect on the direction of Hennessy Capital i.e., Hennessy Capital and ARYA Sciences go up and down completely randomly.
Pair Corralation between Hennessy Capital and ARYA Sciences
If you would invest 1,053 in Hennessy Capital Investment on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Hennessy Capital Investment or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Hennessy Capital Investment vs. ARYA Sciences Acquisition
Performance |
| Timeline |
| Hennessy Capital Inv |
| ARYA Sciences Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hennessy Capital and ARYA Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Capital and ARYA Sciences
The main advantage of trading using opposite Hennessy Capital and ARYA Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Capital position performs unexpectedly, ARYA Sciences 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 ARYA Sciences will offset losses from the drop in ARYA Sciences' long position.The idea behind Hennessy Capital Investment and ARYA Sciences Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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