Correlation Between Hennessy Large and Nationwide Inflation
Can any of the company-specific risk be diversified away by investing in both Hennessy Large and Nationwide Inflation 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 Large and Nationwide Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Large Cap and Nationwide Inflation Protected Securities, you can compare the effects of market volatilities on Hennessy Large and Nationwide Inflation 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 Large with a short position of Nationwide Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Large and Nationwide Inflation.
Diversification Opportunities for Hennessy Large and Nationwide Inflation
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Nationwide is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Large Cap and Nationwide Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Inflation and Hennessy Large 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 Large Cap are associated (or correlated) with Nationwide Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Inflation has no effect on the direction of Hennessy Large i.e., Hennessy Large and Nationwide Inflation go up and down completely randomly.
Pair Corralation between Hennessy Large and Nationwide Inflation
Assuming the 90 days horizon Hennessy Large Cap is expected to generate 5.77 times more return on investment than Nationwide Inflation. However, Hennessy Large is 5.77 times more volatile than Nationwide Inflation Protected Securities. It trades about 0.23 of its potential returns per unit of risk. Nationwide Inflation Protected Securities is currently generating about 0.31 per unit of risk. If you would invest 3,061 in Hennessy Large Cap on November 6, 2024 and sell it today you would earn a total of 174.00 from holding Hennessy Large Cap or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Large Cap vs. Nationwide Inflation Protected
Performance |
| Timeline |
| Hennessy Large Cap |
| Nationwide Inflation |
Hennessy Large and Nationwide Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Large and Nationwide Inflation
The main advantage of trading using opposite Hennessy Large and Nationwide Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Large position performs unexpectedly, Nationwide Inflation 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 Nationwide Inflation will offset losses from the drop in Nationwide Inflation's long position.| Hennessy Large vs. Hennessy Large Cap | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. T Rowe Price |
| Nationwide Inflation vs. Kinetics Small Cap | Nationwide Inflation vs. Artisan Small Cap | Nationwide Inflation vs. Small Pany Growth | Nationwide Inflation vs. Praxis 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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