Correlation Between Victory High and Hennessy
Can any of the company-specific risk be diversified away by investing in both Victory High 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 Victory High and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Victory High Income and Hennessy Bp Energy, you can compare the effects of market volatilities on Victory High 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 Victory High with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory High and Hennessy.
Diversification Opportunities for Victory High and Hennessy
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Victory and Hennessy is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Victory High Income 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 Victory 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 Victory High Income 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 Victory High i.e., Victory High and Hennessy go up and down completely randomly.
Pair Corralation between Victory High and Hennessy
Assuming the 90 days horizon Victory High is expected to generate 9.13 times less return on investment than Hennessy. But when comparing it to its historical volatility, Victory High Income is 3.23 times less risky than Hennessy. It trades about 0.05 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,540 in Hennessy Bp Energy on September 12, 2024 and sell it today you would earn a total of 272.00 from holding Hennessy Bp Energy or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Victory High Income vs. Hennessy Bp Energy
Performance |
| Timeline |
| Victory High Income |
| Hennessy Bp Energy |
Victory High and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Victory High and Hennessy
The main advantage of trading using opposite Victory High and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory High 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.| Victory High vs. Aqr Large Cap | Victory High vs. M Large Cap | Victory High vs. Touchstone Large Cap | Victory High vs. Qs Large Cap |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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