Correlation Between Lord Abbett and Hennessy
Can any of the company-specific risk be diversified away by investing in both Lord Abbett 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 Lord Abbett and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Diversified and Hennessy Bp Energy, you can compare the effects of market volatilities on Lord Abbett 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 Lord Abbett with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Hennessy.
Diversification Opportunities for Lord Abbett and Hennessy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lord and Hennessy is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Diversified 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 Lord Abbett 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 Lord Abbett Diversified 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 Lord Abbett i.e., Lord Abbett and Hennessy go up and down completely randomly.
Pair Corralation between Lord Abbett and Hennessy
Assuming the 90 days horizon Lord Abbett is expected to generate 3.48 times less return on investment than Hennessy. But when comparing it to its historical volatility, Lord Abbett Diversified is 3.91 times less risky than Hennessy. It trades about 0.17 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,583 in Hennessy Bp Energy on September 3, 2024 and sell it today you would earn a total of 289.00 from holding Hennessy Bp Energy or generate 11.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Diversified vs. Hennessy Bp Energy
Performance |
| Timeline |
| Lord Abbett Diversified |
| Hennessy Bp Energy |
Lord Abbett and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Hennessy
The main advantage of trading using opposite Lord Abbett and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett 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.| Lord Abbett vs. Hennessy Bp Energy | Lord Abbett vs. Calvert Global Energy | Lord Abbett vs. Oil Gas Ultrasector | Lord Abbett vs. Tortoise Energy Independence |
| Hennessy vs. World Energy Fund | Hennessy vs. Ivy Energy Fund | Hennessy vs. Blackrock All Cap Energy | Hennessy vs. Energy Fund Class |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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