Correlation Between Aig Government and Hennessy Nerstone
Can any of the company-specific risk be diversified away by investing in both Aig Government and Hennessy Nerstone 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 Aig Government and Hennessy Nerstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Hennessy Nerstone Large, you can compare the effects of market volatilities on Aig Government and Hennessy Nerstone 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 Aig Government with a short position of Hennessy Nerstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Hennessy Nerstone.
Diversification Opportunities for Aig Government and Hennessy Nerstone
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aig and Hennessy is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money and Hennessy Nerstone Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Large and Aig Government 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 Aig Government Money are associated (or correlated) with Hennessy Nerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Large has no effect on the direction of Aig Government i.e., Aig Government and Hennessy Nerstone go up and down completely randomly.
Pair Corralation between Aig Government and Hennessy Nerstone
Assuming the 90 days horizon Aig Government is expected to generate 3.03 times less return on investment than Hennessy Nerstone. But when comparing it to its historical volatility, Aig Government Money is 4.4 times less risky than Hennessy Nerstone. It trades about 0.12 of its potential returns per unit of risk. Hennessy Nerstone Large is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,181 in Hennessy Nerstone Large on September 3, 2024 and sell it today you would earn a total of 100.00 from holding Hennessy Nerstone Large or generate 8.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aig Government Money vs. Hennessy Nerstone Large
Performance |
| Timeline |
| Aig Government Money |
| Hennessy Nerstone Large |
Aig Government and Hennessy Nerstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Hennessy Nerstone
The main advantage of trading using opposite Aig Government and Hennessy Nerstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government position performs unexpectedly, Hennessy Nerstone 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 Nerstone will offset losses from the drop in Hennessy Nerstone's long position.| Aig Government vs. Nuveen Massachusetts Municipal | Aig Government vs. Nuveen Massachusetts Municipal | Aig Government vs. Mfs Massachusetts Municipal |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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