Correlation Between Hennessy and Gmo Resources
Can any of the company-specific risk be diversified away by investing in both Hennessy and Gmo Resources 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 Gmo Resources 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 Gmo Resources, you can compare the effects of market volatilities on Hennessy and Gmo Resources 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 Gmo Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Gmo Resources.
Diversification Opportunities for Hennessy and Gmo Resources
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hennessy and Gmo is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Gmo Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Resources 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 Gmo Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Resources has no effect on the direction of Hennessy i.e., Hennessy and Gmo Resources go up and down completely randomly.
Pair Corralation between Hennessy and Gmo Resources
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 0.88 times more return on investment than Gmo Resources. However, Hennessy Bp Energy is 1.14 times less risky than Gmo Resources. It trades about 0.1 of its potential returns per unit of risk. Gmo Resources is currently generating about 0.0 per unit of risk. If you would invest 2,391 in Hennessy Bp Energy on August 27, 2024 and sell it today you would earn a total of 503.00 from holding Hennessy Bp Energy or generate 21.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Gmo Resources
Performance |
| Timeline |
| Hennessy Bp Energy |
| Gmo Resources |
Hennessy and Gmo Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Gmo Resources
The main advantage of trading using opposite Hennessy and Gmo Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Gmo Resources 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 Gmo Resources will offset losses from the drop in Gmo Resources' long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Gmo Resources vs. Ab Centrated Growth | Gmo Resources vs. Artisan Small Cap | Gmo Resources vs. Rational Defensive Growth | Gmo Resources vs. Praxis Growth Index |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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