Correlation Between Hennessy and Nebraska Municipal
Can any of the company-specific risk be diversified away by investing in both Hennessy and Nebraska Municipal 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 Nebraska Municipal 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 Nebraska Municipal Fund, you can compare the effects of market volatilities on Hennessy and Nebraska Municipal 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 Nebraska Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Nebraska Municipal.
Diversification Opportunities for Hennessy and Nebraska Municipal
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and Nebraska is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Nebraska Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nebraska Municipal 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 Nebraska Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nebraska Municipal has no effect on the direction of Hennessy i.e., Hennessy and Nebraska Municipal go up and down completely randomly.
Pair Corralation between Hennessy and Nebraska Municipal
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 3.68 times more return on investment than Nebraska Municipal. However, Hennessy is 3.68 times more volatile than Nebraska Municipal Fund. It trades about 0.38 of its potential returns per unit of risk. Nebraska Municipal Fund is currently generating about 0.25 per unit of risk. If you would invest 2,588 in Hennessy Bp Energy on September 1, 2024 and sell it today you would earn a total of 271.00 from holding Hennessy Bp Energy or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Nebraska Municipal Fund
Performance |
| Timeline |
| Hennessy Bp Energy |
| Nebraska Municipal |
Hennessy and Nebraska Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Nebraska Municipal
The main advantage of trading using opposite Hennessy and Nebraska Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Nebraska Municipal 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 Nebraska Municipal will offset losses from the drop in Nebraska Municipal's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Nebraska Municipal vs. Viking Tax Free Fund | Nebraska Municipal vs. Integrity Dividend Summit | Nebraska Municipal vs. Integrity Dividend Summit | Nebraska Municipal vs. Nebraska Municipal Fund |
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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