Correlation Between Hennessy Nerstone and Western Asset
Can any of the company-specific risk be diversified away by investing in both Hennessy Nerstone and Western Asset 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 Nerstone and Western Asset 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 Western Asset Intermediate, you can compare the effects of market volatilities on Hennessy Nerstone and Western Asset 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 Nerstone with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Nerstone and Western Asset.
Diversification Opportunities for Hennessy Nerstone and Western Asset
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and Western is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Western Asset Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm and Hennessy Nerstone 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Interm has no effect on the direction of Hennessy Nerstone i.e., Hennessy Nerstone and Western Asset go up and down completely randomly.
Pair Corralation between Hennessy Nerstone and Western Asset
Assuming the 90 days horizon Hennessy Nerstone Mid is expected to under-perform the Western Asset. In addition to that, Hennessy Nerstone is 16.49 times more volatile than Western Asset Intermediate. It trades about -0.18 of its total potential returns per unit of risk. Western Asset Intermediate is currently generating about 0.19 per unit of volatility. If you would invest 961.00 in Western Asset Intermediate on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Western Asset Intermediate or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Nerstone Mid vs. Western Asset Intermediate
Performance |
| Timeline |
| Hennessy Nerstone Mid |
| Western Asset Interm |
Hennessy Nerstone and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Nerstone and Western Asset
The main advantage of trading using opposite Hennessy Nerstone and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Nerstone position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Hennessy Nerstone vs. Hennessy Focus Fund | Hennessy Nerstone vs. Small Company Stock Fund | Hennessy Nerstone vs. Large Cap E | Hennessy Nerstone vs. Eventide Gilead Fund |
| Western Asset vs. SCOR PK | Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Via Renewables | Western Asset vs. Bondbloxx ETF Trust |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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