Correlation Between Hennessy and Lgm Risk
Can any of the company-specific risk be diversified away by investing in both Hennessy and Lgm Risk 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 Lgm Risk 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 Lgm Risk Managed, you can compare the effects of market volatilities on Hennessy and Lgm Risk 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 Lgm Risk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Lgm Risk.
Diversification Opportunities for Hennessy and Lgm Risk
Very poor diversification
The 3 months correlation between Hennessy and Lgm is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Lgm Risk Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lgm Risk 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 Lgm Risk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lgm Risk Managed has no effect on the direction of Hennessy i.e., Hennessy and Lgm Risk go up and down completely randomly.
Pair Corralation between Hennessy and Lgm Risk
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 3.19 times more return on investment than Lgm Risk. However, Hennessy is 3.19 times more volatile than Lgm Risk Managed. It trades about 0.05 of its potential returns per unit of risk. Lgm Risk Managed is currently generating about 0.15 per unit of risk. If you would invest 2,398 in Hennessy Bp Energy on September 15, 2024 and sell it today you would earn a total of 358.00 from holding Hennessy Bp Energy or generate 14.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Lgm Risk Managed
Performance |
| Timeline |
| Hennessy Bp Energy |
| Lgm Risk Managed |
Hennessy and Lgm Risk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Lgm Risk
The main advantage of trading using opposite Hennessy and Lgm Risk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Lgm Risk 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 Lgm Risk will offset losses from the drop in Lgm Risk's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Lgm Risk vs. Hennessy Bp Energy | Lgm Risk vs. Invesco Energy Fund | Lgm Risk vs. World Energy Fund | Lgm Risk vs. Jennison Natural Resources |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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