Correlation Between Hennessy and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Hennessy and Transamerica Emerging 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 Transamerica Emerging 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 Transamerica Emerging Markets, you can compare the effects of market volatilities on Hennessy and Transamerica Emerging 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 Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Transamerica Emerging.
Diversification Opportunities for Hennessy and Transamerica Emerging
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and Transamerica is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging 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 Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Hennessy i.e., Hennessy and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Hennessy and Transamerica Emerging
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 4.34 times more return on investment than Transamerica Emerging. However, Hennessy is 4.34 times more volatile than Transamerica Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.11 per unit of risk. If you would invest 2,279 in Hennessy Bp Energy on September 3, 2024 and sell it today you would earn a total of 593.00 from holding Hennessy Bp Energy or generate 26.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Hennessy Bp Energy |
| Transamerica Emerging |
Hennessy and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Transamerica Emerging
The main advantage of trading using opposite Hennessy and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Transamerica Emerging 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Transamerica Emerging vs. Firsthand Alternative Energy | Transamerica Emerging vs. Oil Gas Ultrasector | Transamerica Emerging vs. Dreyfus Natural Resources | Transamerica Emerging vs. Hennessy Bp Energy |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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