Correlation Between Hennessy and Blackrock All
Can any of the company-specific risk be diversified away by investing in both Hennessy and Blackrock All 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 Blackrock All 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 Blackrock All Cap Energy, you can compare the effects of market volatilities on Hennessy and Blackrock All 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 Blackrock All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Blackrock All.
Diversification Opportunities for Hennessy and Blackrock All
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Blackrock is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Blackrock All Cap Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock All Cap 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 Blackrock All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock All Cap has no effect on the direction of Hennessy i.e., Hennessy and Blackrock All go up and down completely randomly.
Pair Corralation between Hennessy and Blackrock All
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.05 times more return on investment than Blackrock All. However, Hennessy is 1.05 times more volatile than Blackrock All Cap Energy. It trades about -0.05 of its potential returns per unit of risk. Blackrock All Cap Energy is currently generating about -0.18 per unit of risk. If you would invest 2,778 in Hennessy Bp Energy on September 13, 2024 and sell it today you would lose (29.00) from holding Hennessy Bp Energy or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Blackrock All Cap Energy
Performance |
| Timeline |
| Hennessy Bp Energy |
| Blackrock All Cap |
Hennessy and Blackrock All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Blackrock All
The main advantage of trading using opposite Hennessy and Blackrock All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Blackrock All 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 Blackrock All will offset losses from the drop in Blackrock All's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class | Hennessy vs. Fidelity Advisor Energy |
| Blackrock All vs. Blackrock California Municipal | Blackrock All vs. Blackrock Balanced Capital | Blackrock All vs. Blackrock Eurofund Class | Blackrock All vs. Blackrock Funds |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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