Correlation Between Hennessy and Federated Capital
Can any of the company-specific risk be diversified away by investing in both Hennessy and Federated Capital 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 Federated Capital 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 Federated Capital Income, you can compare the effects of market volatilities on Hennessy and Federated Capital 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 Federated Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Federated Capital.
Diversification Opportunities for Hennessy and Federated Capital
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and Federated is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Federated Capital Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Capital Income 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 Federated Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Capital Income has no effect on the direction of Hennessy i.e., Hennessy and Federated Capital go up and down completely randomly.
Pair Corralation between Hennessy and Federated Capital
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 3.94 times more return on investment than Federated Capital. However, Hennessy is 3.94 times more volatile than Federated Capital Income. It trades about 0.14 of its potential returns per unit of risk. Federated Capital Income is currently generating about 0.15 per unit of risk. If you would invest 2,485 in Hennessy Bp Energy on September 12, 2024 and sell it today you would earn a total of 264.00 from holding Hennessy Bp Energy or generate 10.62% 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. Federated Capital Income
Performance |
| Timeline |
| Hennessy Bp Energy |
| Federated Capital Income |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Hennessy and Federated Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Federated Capital
The main advantage of trading using opposite Hennessy and Federated Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Federated Capital 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 Federated Capital will offset losses from the drop in Federated Capital's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class | Hennessy vs. Fidelity Advisor Energy |
| Federated Capital vs. Prudential Jennison Financial | Federated Capital vs. 1919 Financial Services | Federated Capital vs. Angel Oak Financial | Federated Capital vs. Blackrock Financial Institutions |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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