Correlation Between Hennessy and Investment Grade
Can any of the company-specific risk be diversified away by investing in both Hennessy and Investment Grade 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 Investment Grade 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 Investment Grade Bond, you can compare the effects of market volatilities on Hennessy and Investment Grade 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 Investment Grade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Investment Grade.
Diversification Opportunities for Hennessy and Investment Grade
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and INVESTMENT is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Investment Grade Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment Grade 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 Investment Grade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment Grade Bond has no effect on the direction of Hennessy i.e., Hennessy and Investment Grade go up and down completely randomly.
Pair Corralation between Hennessy and Investment Grade
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.97 times more return on investment than Investment Grade. However, Hennessy is 1.97 times more volatile than Investment Grade Bond. It trades about 1.06 of its potential returns per unit of risk. Investment Grade Bond is currently generating about 0.12 per unit of risk. If you would invest 2,620 in Hennessy Bp Energy on October 24, 2024 and sell it today you would earn a total of 304.00 from holding Hennessy Bp Energy or generate 11.6% 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. Investment Grade Bond
Performance |
| Timeline |
| Hennessy Bp Energy |
| Investment Grade Bond |
Hennessy and Investment Grade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Investment Grade
The main advantage of trading using opposite Hennessy and Investment Grade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Investment Grade 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 Investment Grade will offset losses from the drop in Investment Grade's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Investment Grade vs. Hennessy Bp Energy | Investment Grade vs. Clearbridge Energy Mlp | Investment Grade vs. Cohen Steers Mlp | Investment Grade vs. Goldman Sachs Mlp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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