Correlation Between Hennessy and Ab Select
Can any of the company-specific risk be diversified away by investing in both Hennessy and Ab Select 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 Ab Select 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 Ab Select Equity, you can compare the effects of market volatilities on Hennessy and Ab Select 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 Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Ab Select.
Diversification Opportunities for Hennessy and Ab Select
Very poor diversification
The 3 months correlation between Hennessy and AUUIX is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Ab Select Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Equity 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 Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Equity has no effect on the direction of Hennessy i.e., Hennessy and Ab Select go up and down completely randomly.
Pair Corralation between Hennessy and Ab Select
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.72 times more return on investment than Ab Select. However, Hennessy is 1.72 times more volatile than Ab Select Equity. It trades about 0.38 of its potential returns per unit of risk. Ab Select Equity is currently generating about 0.35 per unit of risk. If you would invest 2,588 in Hennessy Bp Energy on September 1, 2024 and sell it today you would earn a total of 271.00 from holding Hennessy Bp Energy or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Ab Select Equity
Performance |
| Timeline |
| Hennessy Bp Energy |
| Ab Select Equity |
Hennessy and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Ab Select
The main advantage of trading using opposite Hennessy and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Ab Select vs. Fidelity Advisor Energy | Ab Select vs. Gamco Natural Resources | Ab Select vs. Hennessy Bp Energy | Ab Select vs. Alpsalerian Energy Infrastructure |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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