Correlation Between Hennessy and Steward International
Can any of the company-specific risk be diversified away by investing in both Hennessy and Steward International 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 Steward International 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 Steward International Enhanced, you can compare the effects of market volatilities on Hennessy and Steward International 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 Steward International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Steward International.
Diversification Opportunities for Hennessy and Steward International
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hennessy and Steward is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Steward International Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steward International 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 Steward International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steward International has no effect on the direction of Hennessy i.e., Hennessy and Steward International go up and down completely randomly.
Pair Corralation between Hennessy and Steward International
Assuming the 90 days horizon Hennessy is expected to generate 6.08 times less return on investment than Steward International. In addition to that, Hennessy is 2.66 times more volatile than Steward International Enhanced. It trades about 0.03 of its total potential returns per unit of risk. Steward International Enhanced is currently generating about 0.46 per unit of volatility. If you would invest 2,059 in Steward International Enhanced on September 14, 2024 and sell it today you would earn a total of 77.00 from holding Steward International Enhanced or generate 3.74% 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. Steward International Enhanced
Performance |
| Timeline |
| Hennessy Bp Energy |
| Steward International |
Hennessy and Steward International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Steward International
The main advantage of trading using opposite Hennessy and Steward International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Steward International 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 Steward International will offset losses from the drop in Steward International's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Steward International vs. Icon Natural Resources | Steward International vs. Short Oil Gas | Steward International vs. Hennessy Bp Energy | Steward International vs. Invesco Energy 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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