Correlation Between Hennessy and Franklin International
Can any of the company-specific risk be diversified away by investing in both Hennessy and Franklin International 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 Franklin International 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 Franklin International Core, you can compare the effects of market volatilities on Hennessy and Franklin International 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 Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Franklin International.
Diversification Opportunities for Hennessy and Franklin International
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and Franklin is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International 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 Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Hennessy i.e., Hennessy and Franklin International go up and down completely randomly.
Pair Corralation between Hennessy and Franklin International
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.28 times more return on investment than Franklin International. However, Hennessy is 1.28 times more volatile than Franklin International Core. It trades about 0.05 of its potential returns per unit of risk. Franklin International Core is currently generating about -0.02 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. Franklin International Core
Performance |
| Timeline |
| Hennessy Bp Energy |
| Franklin International |
Hennessy and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Franklin International
The main advantage of trading using opposite Hennessy and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Franklin International 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 Franklin International will offset losses from the drop in Franklin International's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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