Correlation Between Hennessy Cornerstone and American Beacon
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and American Beacon 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 American Beacon 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 American Beacon Twentyfour, you can compare the effects of market volatilities on Hennessy Cornerstone and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and American Beacon.
Diversification Opportunities for Hennessy Cornerstone and American Beacon
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Twen has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and American Beacon go up and down completely randomly.
Pair Corralation between Hennessy Cornerstone and American Beacon
Assuming the 90 days horizon Hennessy Nerstone Mid is expected to generate 12.99 times more return on investment than American Beacon. However, Hennessy Cornerstone is 12.99 times more volatile than American Beacon Twentyfour. It trades about 0.31 of its potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.18 per unit of risk. If you would invest 2,661 in Hennessy Nerstone Mid on August 31, 2024 and sell it today you would earn a total of 218.00 from holding Hennessy Nerstone Mid or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Nerstone Mid vs. American Beacon Twentyfour
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| American Beacon Twen |
Hennessy Cornerstone and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Cornerstone and American Beacon
The main advantage of trading using opposite Hennessy Cornerstone and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Hennessy Cornerstone vs. Hennessy Focus Fund | Hennessy Cornerstone vs. Small Company Stock Fund | Hennessy Cornerstone vs. Large Cap E | Hennessy Cornerstone vs. Eventide Gilead Fund |
| American Beacon vs. Amg River Road | American Beacon vs. Hennessy Nerstone Mid | American Beacon vs. Ultramid Cap Profund Ultramid Cap | American Beacon vs. Columbia Small Cap |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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