Correlation Between Hennessy and Columbia Small
Can any of the company-specific risk be diversified away by investing in both Hennessy and Columbia Small 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 Columbia Small 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 Columbia Small Cap, you can compare the effects of market volatilities on Hennessy and Columbia Small 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 Columbia Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Columbia Small.
Diversification Opportunities for Hennessy and Columbia Small
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Columbia is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Columbia Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Small 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 Columbia Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Small Cap has no effect on the direction of Hennessy i.e., Hennessy and Columbia Small go up and down completely randomly.
Pair Corralation between Hennessy and Columbia Small
Assuming the 90 days horizon Hennessy Bp Energy is expected to under-perform the Columbia Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hennessy Bp Energy is 1.34 times less risky than Columbia Small. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Columbia Small Cap is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 5,553 in Columbia Small Cap on September 20, 2024 and sell it today you would lose (256.00) from holding Columbia Small Cap or give up 4.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Columbia Small Cap
Performance |
| Timeline |
| Hennessy Bp Energy |
| Columbia Small Cap |
Hennessy and Columbia Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Columbia Small
The main advantage of trading using opposite Hennessy and Columbia Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Columbia Small 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 Columbia Small will offset losses from the drop in Columbia Small's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Columbia Small vs. Barings Global Floating | Columbia Small vs. Franklin Mutual Global | Columbia Small vs. Ab Global Risk | Columbia Small vs. Mirova Global Green |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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