Correlation Between Hennessy and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Hennessy and Absolute Convertible 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 Absolute Convertible 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 Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Hennessy and Absolute Convertible 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 Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Absolute Convertible.
Diversification Opportunities for Hennessy and Absolute Convertible
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and Absolute is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible 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 Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Hennessy i.e., Hennessy and Absolute Convertible go up and down completely randomly.
Pair Corralation between Hennessy and Absolute Convertible
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 23.66 times more return on investment than Absolute Convertible. However, Hennessy is 23.66 times more volatile than Absolute Convertible Arbitrage. It trades about 0.14 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.59 per unit of risk. If you would invest 2,583 in Hennessy Bp Energy on August 31, 2024 and sell it today you would earn a total of 276.00 from holding Hennessy Bp Energy or generate 10.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Hennessy Bp Energy |
| Absolute Convertible |
Hennessy and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Absolute Convertible
The main advantage of trading using opposite Hennessy and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Absolute Convertible vs. Calamos Market Neutral | Absolute Convertible vs. Calamos Market Neutral | Absolute Convertible vs. Aqr Diversified Arbitrage | Absolute Convertible vs. Aqr Diversified Arbitrage |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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