Correlation Between Hennessy and World Energy
Can any of the company-specific risk be diversified away by investing in both Hennessy and World Energy 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 and World Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Bp Energy and World Energy Fund, you can compare the effects of market volatilities on Hennessy and World Energy 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 with a short position of World Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and World Energy.
Diversification Opportunities for Hennessy and World Energy
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hennessy and World is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and World Energy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Energy and Hennessy 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 Bp Energy are associated (or correlated) with World Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Energy has no effect on the direction of Hennessy i.e., Hennessy and World Energy go up and down completely randomly.
Pair Corralation between Hennessy and World Energy
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.0 times more return on investment than World Energy. However, Hennessy Bp Energy is 1.0 times less risky than World Energy. It trades about 0.36 of its potential returns per unit of risk. World Energy Fund is currently generating about 0.27 per unit of risk. If you would invest 2,590 in Hennessy Bp Energy on August 31, 2024 and sell it today you would earn a total of 269.00 from holding Hennessy Bp Energy or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. World Energy Fund
Performance |
| Timeline |
| Hennessy Bp Energy |
| World Energy |
Hennessy and World Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and World Energy
The main advantage of trading using opposite Hennessy and World Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, World Energy 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 World Energy will offset losses from the drop in World Energy's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| World Energy vs. Arrow Managed Futures | World Energy vs. Ab Bond Inflation | World Energy vs. Ab Bond Inflation | World Energy vs. Aqr Managed Futures |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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