Correlation Between Energy Fund and Hennessy
Can any of the company-specific risk be diversified away by investing in both Energy Fund 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 Energy Fund and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Fund Class and Hennessy Bp Energy, you can compare the effects of market volatilities on Energy Fund 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 Energy Fund with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Fund and Hennessy.
Diversification Opportunities for Energy Fund and Hennessy
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Energy and Hennessy is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fund Class 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 Energy Fund 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 Energy Fund Class 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 Energy Fund i.e., Energy Fund and Hennessy go up and down completely randomly.
Pair Corralation between Energy Fund and Hennessy
Assuming the 90 days horizon Energy Fund is expected to generate 1.63 times less return on investment than Hennessy. But when comparing it to its historical volatility, Energy Fund Class is 1.03 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 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,092 in Hennessy Bp Energy on August 29, 2024 and sell it today you would earn a total of 802.00 from holding Hennessy Bp Energy or generate 38.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Fund Class vs. Hennessy Bp Energy
Performance |
| Timeline |
| Energy Fund Class |
| Hennessy Bp Energy |
Energy Fund and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Fund and Hennessy
The main advantage of trading using opposite Energy Fund and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Fund 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.| Energy Fund vs. Energy Services Fund | Energy Fund vs. Basic Materials Fund | Energy Fund vs. Health Care Fund | Energy Fund vs. Precious Metals Fund |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |