Correlation Between Hennessy and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both Hennessy and Lord Abbett 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 Lord Abbett 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 Lord Abbett High, you can compare the effects of market volatilities on Hennessy and Lord Abbett 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 Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Lord Abbett.
Diversification Opportunities for Hennessy and Lord Abbett
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Lord is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Lord Abbett High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett High 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 Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett High has no effect on the direction of Hennessy i.e., Hennessy and Lord Abbett go up and down completely randomly.
Pair Corralation between Hennessy and Lord Abbett
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 8.28 times more return on investment than Lord Abbett. However, Hennessy is 8.28 times more volatile than Lord Abbett High. It trades about 0.4 of its potential returns per unit of risk. Lord Abbett High is currently generating about 0.15 per unit of risk. If you would invest 2,607 in Hennessy Bp Energy on September 4, 2024 and sell it today you would earn a total of 265.00 from holding Hennessy Bp Energy or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Lord Abbett High
Performance |
| Timeline |
| Hennessy Bp Energy |
| Lord Abbett High |
Hennessy and Lord Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Lord Abbett
The main advantage of trading using opposite Hennessy and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Lord Abbett 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 Lord Abbett will offset losses from the drop in Lord Abbett's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Lord Abbett vs. Clearbridge Energy Mlp | Lord Abbett vs. World Energy Fund | Lord Abbett vs. Hennessy Bp Energy | Lord Abbett vs. Oil Gas Ultrasector |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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