Correlation Between Pace High and Hennessy Small
Can any of the company-specific risk be diversified away by investing in both Pace High 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 Pace High and Hennessy Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Hennessy Small Cap, you can compare the effects of market volatilities on Pace High 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 Pace High with a short position of Hennessy Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Hennessy Small.
Diversification Opportunities for Pace High and Hennessy Small
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pace and Hennessy is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield 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 Pace High 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 Pace High Yield 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 Pace High i.e., Pace High and Hennessy Small go up and down completely randomly.
Pair Corralation between Pace High and Hennessy Small
Assuming the 90 days horizon Pace High is expected to generate 1.17 times less return on investment than Hennessy Small. But when comparing it to its historical volatility, Pace High Yield is 8.33 times less risky than Hennessy Small. It trades about 0.16 of its potential returns per unit of risk. Hennessy Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,599 in Hennessy Small Cap on August 24, 2024 and sell it today you would earn a total of 211.00 from holding Hennessy Small Cap or generate 13.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Hennessy Small Cap
Performance |
| Timeline |
| Pace High Yield |
| Hennessy Small Cap |
Pace High and Hennessy Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Hennessy Small
The main advantage of trading using opposite Pace High and Hennessy Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High 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.| Pace High vs. Prudential High Yield | Pace High vs. Parametric Modity Strategy | Pace High vs. HUMANA INC | Pace High vs. Aquagold International |
| Hennessy Small vs. Metropolitan West High | Hennessy Small vs. Western Asset High | Hennessy Small vs. Pace High Yield | Hennessy Small vs. Ab Global Risk |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| CEOs Directory Screen CEOs from public companies around the world |