Correlation Between Hennessy and International Investors
Can any of the company-specific risk be diversified away by investing in both Hennessy and International Investors 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 International Investors 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 International Investors Gold, you can compare the effects of market volatilities on Hennessy and International Investors 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 International Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and International Investors.
Diversification Opportunities for Hennessy and International Investors
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and International is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and International Investors Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Investors 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 International Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Investors has no effect on the direction of Hennessy i.e., Hennessy and International Investors go up and down completely randomly.
Pair Corralation between Hennessy and International Investors
Assuming the 90 days horizon Hennessy Bp Energy is expected to under-perform the International Investors. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hennessy Bp Energy is 1.72 times less risky than International Investors. The mutual fund trades about -0.04 of its potential returns per unit of risk. The International Investors Gold is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 923.00 in International Investors Gold on September 15, 2024 and sell it today you would earn a total of 37.00 from holding International Investors Gold or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Bp Energy vs. International Investors Gold
Performance |
| Timeline |
| Hennessy Bp Energy |
| International Investors |
Hennessy and International Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and International Investors
The main advantage of trading using opposite Hennessy and International Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, International Investors 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 International Investors will offset losses from the drop in International Investors' long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| International Investors vs. Invesco Energy Fund | International Investors vs. Dreyfus Natural Resources | International Investors vs. Hennessy Bp Energy | International Investors vs. Short Oil Gas |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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