Correlation Between Hennessy and College Retirement
Can any of the company-specific risk be diversified away by investing in both Hennessy and College Retirement 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 College Retirement 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 College Retirement Equities, you can compare the effects of market volatilities on Hennessy and College Retirement 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 College Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and College Retirement.
Diversification Opportunities for Hennessy and College Retirement
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hennessy and College is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement 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 College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Hennessy i.e., Hennessy and College Retirement go up and down completely randomly.
Pair Corralation between Hennessy and College Retirement
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.53 times more return on investment than College Retirement. However, Hennessy is 1.53 times more volatile than College Retirement Equities. It trades about 0.04 of its potential returns per unit of risk. College Retirement Equities is currently generating about -0.01 per unit of risk. If you would invest 2,712 in Hennessy Bp Energy on October 14, 2024 and sell it today you would earn a total of 63.00 from holding Hennessy Bp Energy or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. College Retirement Equities
Performance |
| Timeline |
| Hennessy Bp Energy |
| College Retirement |
Hennessy and College Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and College Retirement
The main advantage of trading using opposite Hennessy and College Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, College Retirement 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 College Retirement will offset losses from the drop in College Retirement's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| College Retirement vs. Hennessy Bp Energy | College Retirement vs. Vanguard Energy Index | College Retirement vs. Thrivent Natural Resources | College Retirement vs. Pimco Energy Tactical |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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