Correlation Between Hennessy Capital and Home Plate
Can any of the company-specific risk be diversified away by investing in both Hennessy Capital and Home Plate 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 Home Plate 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 Home Plate Acquisition, you can compare the effects of market volatilities on Hennessy Capital and Home Plate 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 Home Plate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Capital and Home Plate.
Diversification Opportunities for Hennessy Capital and Home Plate
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Hennessy and Home is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Capital Investment and Home Plate Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Plate 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 Home Plate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Plate Acquisition has no effect on the direction of Hennessy Capital i.e., Hennessy Capital and Home Plate go up and down completely randomly.
Pair Corralation between Hennessy Capital and Home Plate
Assuming the 90 days horizon Hennessy Capital Investment is expected to generate 1.66 times more return on investment than Home Plate. However, Hennessy Capital is 1.66 times more volatile than Home Plate Acquisition. It trades about 0.02 of its potential returns per unit of risk. Home Plate Acquisition is currently generating about 0.01 per unit of risk. If you would invest 995.00 in Hennessy Capital Investment on August 26, 2024 and sell it today you would earn a total of 60.00 from holding Hennessy Capital Investment or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 28.93% |
| Values | Daily Returns |
Hennessy Capital Investment vs. Home Plate Acquisition
Performance |
| Timeline |
| Hennessy Capital Inv |
| Home Plate Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hennessy Capital and Home Plate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Capital and Home Plate
The main advantage of trading using opposite Hennessy Capital and Home Plate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Capital position performs unexpectedly, Home Plate 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 Home Plate will offset losses from the drop in Home Plate's long position.The idea behind Hennessy Capital Investment and Home Plate 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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