Correlation Between Hennessy and American Funds
Can any of the company-specific risk be diversified away by investing in both Hennessy and American Funds 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 American Funds 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 American Funds Inflation, you can compare the effects of market volatilities on Hennessy and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and American Funds.
Diversification Opportunities for Hennessy and American Funds
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and American is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and American Funds Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Inflation 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Inflation has no effect on the direction of Hennessy i.e., Hennessy and American Funds go up and down completely randomly.
Pair Corralation between Hennessy and American Funds
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 4.58 times more return on investment than American Funds. However, Hennessy is 4.58 times more volatile than American Funds Inflation. It trades about 0.05 of its potential returns per unit of risk. American Funds Inflation is currently generating about 0.1 per unit of risk. If you would invest 2,665 in Hennessy Bp Energy on September 1, 2024 and sell it today you would earn a total of 194.00 from holding Hennessy Bp Energy or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Hennessy Bp Energy vs. American Funds Inflation
Performance |
| Timeline |
| Hennessy Bp Energy |
| American Funds Inflation |
Hennessy and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and American Funds
The main advantage of trading using opposite Hennessy and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| American Funds vs. Cref Inflation Linked Bond | American Funds vs. Nationwide Inflation Protected Securities | American Funds vs. Arrow Managed Futures | American Funds vs. Ab Bond Inflation |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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