Correlation Between Hennessy and Franklin Utilities
Can any of the company-specific risk be diversified away by investing in both Hennessy and Franklin Utilities 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 Utilities 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 Utilities Fund, you can compare the effects of market volatilities on Hennessy and Franklin Utilities 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 Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Franklin Utilities.
Diversification Opportunities for Hennessy and Franklin Utilities
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Franklin is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Franklin Utilities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Utilities 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 Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Utilities has no effect on the direction of Hennessy i.e., Hennessy and Franklin Utilities go up and down completely randomly.
Pair Corralation between Hennessy and Franklin Utilities
Assuming the 90 days horizon Hennessy Bp Energy is expected to under-perform the Franklin Utilities. In addition to that, Hennessy is 1.09 times more volatile than Franklin Utilities Fund. It trades about -0.05 of its total potential returns per unit of risk. Franklin Utilities Fund is currently generating about -0.05 per unit of volatility. If you would invest 2,501 in Franklin Utilities Fund on September 13, 2024 and sell it today you would lose (24.00) from holding Franklin Utilities Fund or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Franklin Utilities Fund
Performance |
| Timeline |
| Hennessy Bp Energy |
| Franklin Utilities |
Hennessy and Franklin Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Franklin Utilities
The main advantage of trading using opposite Hennessy and Franklin Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Franklin Utilities 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 Utilities will offset losses from the drop in Franklin Utilities' long position.| Hennessy vs. World Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class | Hennessy vs. Fidelity Advisor Energy |
| Franklin Utilities vs. Putnam Convertible Incm Gwth | Franklin Utilities vs. Rationalpier 88 Convertible | Franklin Utilities vs. Advent Claymore Convertible | Franklin Utilities vs. Gabelli Convertible And |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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