Correlation Between Hennessy Large and Angel Oak
Can any of the company-specific risk be diversified away by investing in both Hennessy Large and Angel Oak 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 Angel Oak 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 Angel Oak Financial, you can compare the effects of market volatilities on Hennessy Large and Angel Oak 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 Angel Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Large and Angel Oak.
Diversification Opportunities for Hennessy Large and Angel Oak
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Angel is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Large Cap and Angel Oak Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angel Oak Financial 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 Angel Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angel Oak Financial has no effect on the direction of Hennessy Large i.e., Hennessy Large and Angel Oak go up and down completely randomly.
Pair Corralation between Hennessy Large and Angel Oak
Assuming the 90 days horizon Hennessy Large Cap is expected to generate 6.33 times more return on investment than Angel Oak. However, Hennessy Large is 6.33 times more volatile than Angel Oak Financial. It trades about 0.14 of its potential returns per unit of risk. Angel Oak Financial is currently generating about 0.06 per unit of risk. If you would invest 1,951 in Hennessy Large Cap on September 1, 2024 and sell it today you would earn a total of 1,261 from holding Hennessy Large Cap or generate 64.63% 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. Angel Oak Financial
Performance |
| Timeline |
| Hennessy Large Cap |
| Angel Oak Financial |
Hennessy Large and Angel Oak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Large and Angel Oak
The main advantage of trading using opposite Hennessy Large and Angel Oak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Large position performs unexpectedly, Angel Oak 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 Angel Oak will offset losses from the drop in Angel Oak'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 |
| Angel Oak vs. Vanguard Total Stock | Angel Oak vs. Vanguard 500 Index | Angel Oak vs. Vanguard Total Stock | Angel Oak vs. Vanguard Total Stock |
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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