Correlation Between Hennessy and Hennessy Large
Can any of the company-specific risk be diversified away by investing in both Hennessy and Hennessy Large 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 Hennessy Large 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 Hennessy Large Cap, you can compare the effects of market volatilities on Hennessy and Hennessy Large 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 Hennessy Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy and Hennessy Large.
Diversification Opportunities for Hennessy and Hennessy Large
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hennessy and Hennessy is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Hennessy Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Large Cap 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 Hennessy Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Large Cap has no effect on the direction of Hennessy i.e., Hennessy and Hennessy Large go up and down completely randomly.
Pair Corralation between Hennessy and Hennessy Large
Assuming the 90 days horizon Hennessy is expected to generate 1.19 times less return on investment than Hennessy Large. But when comparing it to its historical volatility, Hennessy Bp Energy is 2.15 times less risky than Hennessy Large. It trades about 0.4 of its potential returns per unit of risk. Hennessy Large Cap is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 2,825 in Hennessy Large Cap on August 27, 2024 and sell it today you would earn a total of 358.00 from holding Hennessy Large Cap or generate 12.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Bp Energy vs. Hennessy Large Cap
Performance |
| Timeline |
| Hennessy Bp Energy |
| Hennessy Large Cap |
Hennessy and Hennessy Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy and Hennessy Large
The main advantage of trading using opposite Hennessy and Hennessy Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Hennessy Large 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 Hennessy Large will offset losses from the drop in Hennessy Large's long position.| Hennessy vs. Multi Manager High Yield | Hennessy vs. Blackrock High Yield | Hennessy vs. Artisan High Income | Hennessy vs. Pioneer High Yield |
| Hennessy Large vs. Hennessy Large Cap | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. Dow 2x Strategy | Hennessy Large vs. T Rowe Price |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |