Correlation Between Hennessy Small and Emerald Banking
Can any of the company-specific risk be diversified away by investing in both Hennessy Small and Emerald Banking 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 Small and Emerald Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Small Cap and Emerald Banking And, you can compare the effects of market volatilities on Hennessy Small and Emerald Banking 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 Small with a short position of Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Small and Emerald Banking.
Diversification Opportunities for Hennessy Small and Emerald Banking
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Emerald is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And and Hennessy Small 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 Small Cap are associated (or correlated) with Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Hennessy Small i.e., Hennessy Small and Emerald Banking go up and down completely randomly.
Pair Corralation between Hennessy Small and Emerald Banking
Assuming the 90 days horizon Hennessy Small is expected to generate 1.18 times less return on investment than Emerald Banking. In addition to that, Hennessy Small is 1.07 times more volatile than Emerald Banking And. It trades about 0.16 of its total potential returns per unit of risk. Emerald Banking And is currently generating about 0.2 per unit of volatility. If you would invest 2,951 in Emerald Banking And on November 5, 2024 and sell it today you would earn a total of 143.00 from holding Emerald Banking And or generate 4.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hennessy Small Cap vs. Emerald Banking And
Performance |
| Timeline |
| Hennessy Small Cap |
| Emerald Banking And |
Hennessy Small and Emerald Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Small and Emerald Banking
The main advantage of trading using opposite Hennessy Small and Emerald Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Small position performs unexpectedly, Emerald Banking 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 Emerald Banking will offset losses from the drop in Emerald Banking's long position.| Hennessy Small vs. Hennessy Large Cap | Hennessy Small vs. Rmb Mendon Financial | Hennessy Small vs. Hennessy Focus Fund | Hennessy Small vs. Rmb Mendon Financial |
| Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Emerald Banking And | Emerald Banking vs. Rmb Mendon Financial |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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