Correlation Between Hennessy and Highland Long/short
Can any of the company-specific risk be diversified away by investing in both Hennessy and Highland Long/short 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 Highland Long/short 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 Highland Longshort Healthcare, you can compare the effects of market volatilities on Hennessy and Highland Long/short 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 Highland Long/short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Highland Long/short.
Diversification Opportunities for Hennessy and Highland Long/short
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Highland is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Highland Longshort Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Long/short 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 Highland Long/short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Long/short has no effect on the direction of Hennessy i.e., Hennessy and Highland Long/short go up and down completely randomly.
Pair Corralation between Hennessy and Highland Long/short
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 6.71 times more return on investment than Highland Long/short. However, Hennessy is 6.71 times more volatile than Highland Longshort Healthcare. It trades about 0.07 of its potential returns per unit of risk. Highland Longshort Healthcare is currently generating about 0.18 per unit of risk. If you would invest 2,132 in Hennessy Bp Energy on September 4, 2024 and sell it today you would earn a total of 740.00 from holding Hennessy Bp Energy or generate 34.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Highland Longshort Healthcare
Performance |
| Timeline |
| Hennessy Bp Energy |
| Highland Long/short |
Hennessy and Highland Long/short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Highland Long/short
The main advantage of trading using opposite Hennessy and Highland Long/short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Highland Long/short 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 Highland Long/short will offset losses from the drop in Highland Long/short's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Highland Long/short vs. Artisan Small Cap | Highland Long/short vs. Pace Large Growth | Highland Long/short vs. Rational Defensive Growth | Highland Long/short vs. Pace Smallmedium Growth |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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