Correlation Between Hennessy Equity and American Mutual
Can any of the company-specific risk be diversified away by investing in both Hennessy Equity and American Mutual 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 Equity and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Equity And and American Mutual Fund, you can compare the effects of market volatilities on Hennessy Equity and American Mutual 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 Equity with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Equity and American Mutual.
Diversification Opportunities for Hennessy Equity and American Mutual
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and American is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Equity And and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Hennessy Equity 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 Equity And are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Hennessy Equity i.e., Hennessy Equity and American Mutual go up and down completely randomly.
Pair Corralation between Hennessy Equity and American Mutual
Assuming the 90 days horizon Hennessy Equity is expected to generate 1.0 times less return on investment than American Mutual. In addition to that, Hennessy Equity is 1.0 times more volatile than American Mutual Fund. It trades about 0.09 of its total potential returns per unit of risk. American Mutual Fund is currently generating about 0.09 per unit of volatility. If you would invest 5,705 in American Mutual Fund on November 27, 2024 and sell it today you would earn a total of 47.00 from holding American Mutual Fund or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Equity And vs. American Mutual Fund
Performance |
| Timeline |
| Hennessy Equity And |
| American Mutual |
Hennessy Equity and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Equity and American Mutual
The main advantage of trading using opposite Hennessy Equity and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Equity position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Hennessy Equity vs. Cref Inflation Linked Bond | Hennessy Equity vs. Lord Abbett Inflation | Hennessy Equity vs. Short Duration Inflation | Hennessy Equity vs. Inflation Linked Fixed Income |
| American Mutual vs. Amcap Fund Class | American Mutual vs. American Balanced Fund | American Mutual vs. New Perspective Fund | American Mutual vs. New World Fund |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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