Correlation Between Hennessy and Global Real
Can any of the company-specific risk be diversified away by investing in both Hennessy and Global Real 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 Global Real 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 Global Real Estate, you can compare the effects of market volatilities on Hennessy and Global Real 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 Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Global Real.
Diversification Opportunities for Hennessy and Global Real
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Hennessy and Global is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate 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 Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Hennessy i.e., Hennessy and Global Real go up and down completely randomly.
Pair Corralation between Hennessy and Global Real
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.55 times more return on investment than Global Real. However, Hennessy is 1.55 times more volatile than Global Real Estate. It trades about -0.05 of its potential returns per unit of risk. Global Real Estate is currently generating about -0.08 per unit of risk. If you would invest 2,778 in Hennessy Bp Energy on September 13, 2024 and sell it today you would lose (29.00) from holding Hennessy Bp Energy or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Global Real Estate
Performance |
| Timeline |
| Hennessy Bp Energy |
| Global Real Estate |
Hennessy and Global Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Global Real
The main advantage of trading using opposite Hennessy and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class | Hennessy vs. Fidelity Advisor Energy |
| Global Real vs. International Developed Markets | Global Real vs. Global Real Estate | Global Real vs. Global Real Estate | Global Real vs. Global Real Estate |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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