Correlation Between Sp Midcap and Hennessy
Can any of the company-specific risk be diversified away by investing in both Sp Midcap 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 Sp Midcap and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Midcap Index and Hennessy Bp Energy, you can compare the effects of market volatilities on Sp Midcap 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 Sp Midcap with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Midcap and Hennessy.
Diversification Opportunities for Sp Midcap and Hennessy
Modest diversification
The 3 months correlation between MIDKX and Hennessy is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Sp Midcap Index 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 Sp Midcap 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 Sp Midcap Index 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 Sp Midcap i.e., Sp Midcap and Hennessy go up and down completely randomly.
Pair Corralation between Sp Midcap and Hennessy
Assuming the 90 days horizon Sp Midcap is expected to generate 2.68 times less return on investment than Hennessy. In addition to that, Sp Midcap is 1.07 times more volatile than Hennessy Bp Energy. It trades about 0.03 of its total potential returns per unit of risk. Hennessy Bp Energy is currently generating about 0.07 per unit of volatility. If you would invest 2,498 in Hennessy Bp Energy on November 3, 2024 and sell it today you would earn a total of 264.00 from holding Hennessy Bp Energy or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sp Midcap Index vs. Hennessy Bp Energy
Performance |
| Timeline |
| Sp Midcap Index |
| Hennessy Bp Energy |
Sp Midcap and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Midcap and Hennessy
The main advantage of trading using opposite Sp Midcap and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Midcap 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.| Sp Midcap vs. Pimco Energy Tactical | Sp Midcap vs. Goehring Rozencwajg Resources | Sp Midcap vs. Alpsalerian Energy Infrastructure | Sp Midcap vs. Blackrock All Cap Energy |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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