Correlation Between Prudential Utility and Hennessy
Can any of the company-specific risk be diversified away by investing in both Prudential Utility and Hennessy 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 Prudential Utility and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential Utility Fund and Hennessy Bp Energy, you can compare the effects of market volatilities on Prudential Utility and Hennessy 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 Prudential Utility with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential Utility and Hennessy.
Diversification Opportunities for Prudential Utility and Hennessy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prudential and Hennessy is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Prudential Utility Fund and Hennessy Bp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Energy and Prudential Utility 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 Prudential Utility Fund are associated (or correlated) with Hennessy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Bp Energy has no effect on the direction of Prudential Utility i.e., Prudential Utility and Hennessy go up and down completely randomly.
Pair Corralation between Prudential Utility and Hennessy
Assuming the 90 days horizon Prudential Utility Fund is expected to generate 0.71 times more return on investment than Hennessy. However, Prudential Utility Fund is 1.42 times less risky than Hennessy. It trades about 0.05 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about 0.03 per unit of risk. If you would invest 1,349 in Prudential Utility Fund on September 13, 2024 and sell it today you would earn a total of 302.00 from holding Prudential Utility Fund or generate 22.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential Utility Fund vs. Hennessy Bp Energy
Performance |
| Timeline |
| Prudential Utility |
| Hennessy Bp Energy |
Prudential Utility and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential Utility and Hennessy
The main advantage of trading using opposite Prudential Utility and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential Utility position performs unexpectedly, Hennessy 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 will offset losses from the drop in Hennessy's long position.| Prudential Utility vs. Hennessy Bp Energy | Prudential Utility vs. Gamco Natural Resources | Prudential Utility vs. Thrivent Natural Resources | Prudential Utility vs. Adams Natural Resources |
| Hennessy vs. World Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class | Hennessy vs. Fidelity Advisor Energy |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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