Correlation Between Hennessy and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both Hennessy and Mfs Lifetime 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 Mfs Lifetime 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 Mfs Lifetime 2040, you can compare the effects of market volatilities on Hennessy and Mfs Lifetime 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 Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Mfs Lifetime.
Diversification Opportunities for Hennessy and Mfs Lifetime
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Mfs is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Mfs Lifetime 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2040 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 Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2040 has no effect on the direction of Hennessy i.e., Hennessy and Mfs Lifetime go up and down completely randomly.
Pair Corralation between Hennessy and Mfs Lifetime
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 2.61 times more return on investment than Mfs Lifetime. However, Hennessy is 2.61 times more volatile than Mfs Lifetime 2040. It trades about 0.14 of its potential returns per unit of risk. Mfs Lifetime 2040 is currently generating about 0.13 per unit of risk. If you would invest 2,485 in Hennessy Bp Energy on September 12, 2024 and sell it today you would earn a total of 271.00 from holding Hennessy Bp Energy or generate 10.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Mfs Lifetime 2040
Performance |
| Timeline |
| Hennessy Bp Energy |
| Mfs Lifetime 2040 |
Hennessy and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Mfs Lifetime
The main advantage of trading using opposite Hennessy and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Mfs Lifetime 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 Mfs Lifetime will offset losses from the drop in Mfs Lifetime's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Mfs Lifetime vs. Us Vector Equity | Mfs Lifetime vs. Us Strategic Equity | Mfs Lifetime vs. Dodge International Stock | Mfs Lifetime vs. Huber Capital Equity |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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