Correlation Between Hennessy and Us Government
Can any of the company-specific risk be diversified away by investing in both Hennessy and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Hennessy and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Us Government.
Diversification Opportunities for Hennessy and Us Government
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and RGVJX is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Hennessy i.e., Hennessy and Us Government go up and down completely randomly.
Pair Corralation between Hennessy and Us Government
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 2.95 times more return on investment than Us Government. However, Hennessy is 2.95 times more volatile than Us Government Securities. It trades about 0.07 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.02 per unit of risk. If you would invest 2,178 in Hennessy Bp Energy on August 31, 2024 and sell it today you would earn a total of 681.00 from holding Hennessy Bp Energy or generate 31.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Us Government Securities
Performance |
| Timeline |
| Hennessy Bp Energy |
| Us Government Securities |
Hennessy and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Us Government
The main advantage of trading using opposite Hennessy and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Us Government vs. Vanguard Gnma Fund | Us Government vs. Us Government Securities | Us Government vs. American Funds Government | Us Government vs. Fidelity Sai Treasury |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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