Correlation Between Hennessy Cornerstone and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and Goldman Sachs 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 Cornerstone and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Nerstone Mid and Goldman Sachs Focused, you can compare the effects of market volatilities on Hennessy Cornerstone and Goldman Sachs 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 Cornerstone with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Goldman Sachs.
Diversification Opportunities for Hennessy Cornerstone and Goldman Sachs
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and Goldman is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Goldman Sachs Focused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Focused and Hennessy Cornerstone 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 Nerstone Mid are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Focused has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Goldman Sachs go up and down completely randomly.
Pair Corralation between Hennessy Cornerstone and Goldman Sachs
Assuming the 90 days horizon Hennessy Nerstone Mid is expected to generate 1.72 times more return on investment than Goldman Sachs. However, Hennessy Cornerstone is 1.72 times more volatile than Goldman Sachs Focused. It trades about 0.14 of its potential returns per unit of risk. Goldman Sachs Focused is currently generating about 0.14 per unit of risk. If you would invest 1,892 in Hennessy Nerstone Mid on September 4, 2024 and sell it today you would earn a total of 1,001 from holding Hennessy Nerstone Mid or generate 52.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Nerstone Mid vs. Goldman Sachs Focused
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| Goldman Sachs Focused |
Hennessy Cornerstone and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Cornerstone and Goldman Sachs
The main advantage of trading using opposite Hennessy Cornerstone and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, Goldman Sachs 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 Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund | Hennessy Cornerstone vs. Boston Partners All Cap |
| Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean | Goldman Sachs vs. Goldman Sachs Clean |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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