Correlation Between Hennessy and American Beacon
Can any of the company-specific risk be diversified away by investing in both Hennessy and American Beacon 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 Beacon 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 Beacon Bridgeway, you can compare the effects of market volatilities on Hennessy and American Beacon 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 Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and American Beacon.
Diversification Opportunities for Hennessy and American Beacon
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and American Beacon Bridgeway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Bridgeway 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 Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Bridgeway has no effect on the direction of Hennessy i.e., Hennessy and American Beacon go up and down completely randomly.
Pair Corralation between Hennessy and American Beacon
Assuming the 90 days horizon Hennessy Bp Energy is expected to under-perform the American Beacon. In addition to that, Hennessy is 1.08 times more volatile than American Beacon Bridgeway. It trades about -0.05 of its total potential returns per unit of risk. American Beacon Bridgeway is currently generating about 0.14 per unit of volatility. If you would invest 3,858 in American Beacon Bridgeway on September 13, 2024 and sell it today you would earn a total of 100.00 from holding American Beacon Bridgeway or generate 2.59% 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. American Beacon Bridgeway
Performance |
| Timeline |
| Hennessy Bp Energy |
| American Beacon Bridgeway |
Hennessy and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and American Beacon
The main advantage of trading using opposite Hennessy and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, American Beacon 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 Beacon will offset losses from the drop in American Beacon's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class | Hennessy vs. Fidelity Advisor Energy |
| American Beacon vs. Blrc Sgy Mnp | American Beacon vs. Ishares Municipal Bond | American Beacon vs. T Rowe Price | American Beacon vs. T Rowe Price |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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