Correlation Between Loews Corp and Hennessy Capital
Can any of the company-specific risk be diversified away by investing in both Loews Corp and Hennessy Capital 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 Loews Corp and Hennessy Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loews Corp and Hennessy Capital Investment, you can compare the effects of market volatilities on Loews Corp and Hennessy Capital 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 Loews Corp with a short position of Hennessy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loews Corp and Hennessy Capital.
Diversification Opportunities for Loews Corp and Hennessy Capital
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Loews and Hennessy is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Loews Corp and Hennessy Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Capital Inv and Loews Corp 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 Loews Corp are associated (or correlated) with Hennessy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Capital Inv has no effect on the direction of Loews Corp i.e., Loews Corp and Hennessy Capital go up and down completely randomly.
Pair Corralation between Loews Corp and Hennessy Capital
Taking into account the 90-day investment horizon Loews Corp is expected to generate 0.67 times more return on investment than Hennessy Capital. However, Loews Corp is 1.49 times less risky than Hennessy Capital. It trades about 0.1 of its potential returns per unit of risk. Hennessy Capital Investment is currently generating about -0.02 per unit of risk. If you would invest 7,575 in Loews Corp on September 1, 2024 and sell it today you would earn a total of 1,098 from holding Loews Corp or generate 14.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loews Corp vs. Hennessy Capital Investment
Performance |
| Timeline |
| Loews Corp |
| Hennessy Capital Inv |
Loews Corp and Hennessy Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loews Corp and Hennessy Capital
The main advantage of trading using opposite Loews Corp and Hennessy Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loews Corp position performs unexpectedly, Hennessy Capital 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 Capital will offset losses from the drop in Hennessy Capital's long position.| Loews Corp vs. Horace Mann Educators | Loews Corp vs. Global Indemnity PLC | Loews Corp vs. Selective Insurance Group | Loews Corp vs. Kemper |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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