Correlation Between Hennessy and Miller Convertible
Can any of the company-specific risk be diversified away by investing in both Hennessy and Miller Convertible 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 Miller Convertible 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 Miller Vertible Bond, you can compare the effects of market volatilities on Hennessy and Miller Convertible 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 Miller Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Miller Convertible.
Diversification Opportunities for Hennessy and Miller Convertible
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Miller is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Miller Vertible Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miller Vertible Bond 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 Miller Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miller Vertible Bond has no effect on the direction of Hennessy i.e., Hennessy and Miller Convertible go up and down completely randomly.
Pair Corralation between Hennessy and Miller Convertible
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 4.2 times more return on investment than Miller Convertible. However, Hennessy is 4.2 times more volatile than Miller Vertible Bond. It trades about 0.04 of its potential returns per unit of risk. Miller Vertible Bond is currently generating about 0.06 per unit of risk. If you would invest 2,267 in Hennessy Bp Energy on September 4, 2024 and sell it today you would earn a total of 605.00 from holding Hennessy Bp Energy or generate 26.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Miller Vertible Bond
Performance |
| Timeline |
| Hennessy Bp Energy |
| Miller Vertible Bond |
Hennessy and Miller Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Miller Convertible
The main advantage of trading using opposite Hennessy and Miller Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Miller Convertible 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 Miller Convertible will offset losses from the drop in Miller Convertible's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Miller Convertible vs. Semiconductor Ultrasector Profund | Miller Convertible vs. Old Westbury Large | Miller Convertible vs. Qs Large Cap | Miller Convertible vs. Mirova Global Green |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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