Correlation Between Hennessy and William Blair
Can any of the company-specific risk be diversified away by investing in both Hennessy and William Blair 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 William Blair 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 William Blair Small Mid, you can compare the effects of market volatilities on Hennessy and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and William Blair.
Diversification Opportunities for Hennessy and William Blair
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and William is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and William Blair Small Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small 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 William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of Hennessy i.e., Hennessy and William Blair go up and down completely randomly.
Pair Corralation between Hennessy and William Blair
Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.06 times more return on investment than William Blair. However, Hennessy is 1.06 times more volatile than William Blair Small Mid. It trades about 0.35 of its potential returns per unit of risk. William Blair Small Mid is currently generating about 0.31 per unit of risk. If you would invest 2,607 in Hennessy Bp Energy on September 5, 2024 and sell it today you would earn a total of 240.00 from holding Hennessy Bp Energy or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hennessy Bp Energy vs. William Blair Small Mid
Performance |
| Timeline |
| Hennessy Bp Energy |
| William Blair Small |
Hennessy and William Blair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and William Blair
The main advantage of trading using opposite Hennessy and William Blair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, William Blair 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 William Blair will offset losses from the drop in William Blair's long position.| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
| William Blair vs. William Blair Small Mid | William Blair vs. American Beacon Bridgeway | William Blair vs. Conestoga Small Cap | William Blair vs. Artisan Developing World |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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