Correlation Between Hennessy and Templeton World
Can any of the company-specific risk be diversified away by investing in both Hennessy and Templeton World 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 Templeton World 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 Templeton World Fund, you can compare the effects of market volatilities on Hennessy and Templeton World 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 Templeton World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Templeton World.
Diversification Opportunities for Hennessy and Templeton World
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hennessy and Templeton is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Templeton World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton World 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 Templeton World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton World has no effect on the direction of Hennessy i.e., Hennessy and Templeton World go up and down completely randomly.
Pair Corralation between Hennessy and Templeton World
Assuming the 90 days horizon Hennessy is expected to generate 1.0 times less return on investment than Templeton World. In addition to that, Hennessy is 1.3 times more volatile than Templeton World Fund. It trades about 0.05 of its total potential returns per unit of risk. Templeton World Fund is currently generating about 0.07 per unit of volatility. If you would invest 1,394 in Templeton World Fund on November 8, 2024 and sell it today you would earn a total of 350.00 from holding Templeton World Fund or generate 25.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Templeton World Fund
Performance |
| Timeline |
| Hennessy Bp Energy |
| Templeton World |
Hennessy and Templeton World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Templeton World
The main advantage of trading using opposite Hennessy and Templeton World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Templeton World 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 Templeton World will offset losses from the drop in Templeton World's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| Templeton World vs. Great West Loomis Sayles | Templeton World vs. Small Cap Value Profund | Templeton World vs. Mid Cap Growth Profund | Templeton World vs. Boston Partners Small |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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