Correlation Between Nationwide Investor and Hennessy Small
Can any of the company-specific risk be diversified away by investing in both Nationwide Investor and Hennessy Small 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 Nationwide Investor and Hennessy Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nationwide Investor Destinations and Hennessy Small Cap, you can compare the effects of market volatilities on Nationwide Investor and Hennessy Small 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 Nationwide Investor with a short position of Hennessy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nationwide Investor and Hennessy Small.
Diversification Opportunities for Nationwide Investor and Hennessy Small
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nationwide and Hennessy is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nationwide Investor Destinatio and Hennessy Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Small Cap and Nationwide Investor 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 Nationwide Investor Destinations are associated (or correlated) with Hennessy Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Small Cap has no effect on the direction of Nationwide Investor i.e., Nationwide Investor and Hennessy Small go up and down completely randomly.
Pair Corralation between Nationwide Investor and Hennessy Small
Assuming the 90 days horizon Nationwide Investor is expected to generate 1.85 times less return on investment than Hennessy Small. But when comparing it to its historical volatility, Nationwide Investor Destinations is 2.05 times less risky than Hennessy Small. It trades about 0.21 of its potential returns per unit of risk. Hennessy Small Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,490 in Hennessy Small Cap on November 3, 2024 and sell it today you would earn a total of 79.00 from holding Hennessy Small Cap or generate 5.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nationwide Investor Destinatio vs. Hennessy Small Cap
Performance |
| Timeline |
| Nationwide Investor |
| Hennessy Small Cap |
Nationwide Investor and Hennessy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nationwide Investor and Hennessy Small
The main advantage of trading using opposite Nationwide Investor and Hennessy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nationwide Investor position performs unexpectedly, Hennessy Small 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 Small will offset losses from the drop in Hennessy Small's long position.| Nationwide Investor vs. Legg Mason Partners | Nationwide Investor vs. Vy Columbia Small | Nationwide Investor vs. Praxis Small Cap | Nationwide Investor vs. Franklin Small Cap |
| Hennessy Small vs. Dreyfusstandish Global Fixed | Hennessy Small vs. Angel Oak Financial | Hennessy Small vs. Goldman Sachs Short | Hennessy Small vs. Ab Global Bond |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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