Correlation Between Hennessy and International Growth
Can any of the company-specific risk be diversified away by investing in both Hennessy and International Growth 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 International Growth 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 International Growth Fund, you can compare the effects of market volatilities on Hennessy and International Growth 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 International Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and International Growth.
Diversification Opportunities for Hennessy and International Growth
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hennessy and International is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and International Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Growth 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 International Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Growth has no effect on the direction of Hennessy i.e., Hennessy and International Growth go up and down completely randomly.
Pair Corralation between Hennessy and International Growth
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.34 times more return on investment than International Growth. However, Hennessy is 1.34 times more volatile than International Growth Fund. It trades about 0.07 of its potential returns per unit of risk. International Growth Fund is currently generating about 0.02 per unit of risk. If you would invest 2,132 in Hennessy Bp Energy on September 2, 2024 and sell it today you would earn a total of 740.00 from holding Hennessy Bp Energy or generate 34.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. International Growth Fund
Performance |
| Timeline |
| Hennessy Bp Energy |
| International Growth |
Hennessy and International Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and International Growth
The main advantage of trading using opposite Hennessy and International Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, International Growth 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 International Growth will offset losses from the drop in International Growth's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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