Correlation Between Hennessy and James Alpha
Can any of the company-specific risk be diversified away by investing in both Hennessy and James Alpha 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 James Alpha 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 James Alpha Managed, you can compare the effects of market volatilities on Hennessy and James Alpha 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 James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and James Alpha.
Diversification Opportunities for Hennessy and James Alpha
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and James is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and James Alpha Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Managed 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 James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Managed has no effect on the direction of Hennessy i.e., Hennessy and James Alpha go up and down completely randomly.
Pair Corralation between Hennessy and James Alpha
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 2.69 times more return on investment than James Alpha. However, Hennessy is 2.69 times more volatile than James Alpha Managed. It trades about 0.17 of its potential returns per unit of risk. James Alpha Managed is currently generating about 0.13 per unit of risk. If you would invest 2,610 in Hennessy Bp Energy on August 30, 2024 and sell it today you would earn a total of 239.00 from holding Hennessy Bp Energy or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Hennessy Bp Energy vs. James Alpha Managed
Performance |
| Timeline |
| Hennessy Bp Energy |
| James Alpha Managed |
Hennessy and James Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and James Alpha
The main advantage of trading using opposite Hennessy and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, James Alpha 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 James Alpha will offset losses from the drop in James Alpha's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| James Alpha vs. Energy Services Fund | James Alpha vs. Hennessy Bp Energy | James Alpha vs. Guinness Atkinson Alternative | James Alpha vs. Victory Global Natural |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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