Correlation Between Templeton World and Hennessy
Can any of the company-specific risk be diversified away by investing in both Templeton World 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 Templeton World and Hennessy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton World Fund and Hennessy Bp Energy, you can compare the effects of market volatilities on Templeton World 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 Templeton World with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton World and Hennessy.
Diversification Opportunities for Templeton World and Hennessy
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Templeton and Hennessy is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Templeton World Fund 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 Templeton World 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 Templeton World Fund 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 Templeton World i.e., Templeton World and Hennessy go up and down completely randomly.
Pair Corralation between Templeton World and Hennessy
Assuming the 90 days horizon Templeton World Fund is expected to under-perform the Hennessy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Templeton World Fund is 1.08 times less risky than Hennessy. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Hennessy Bp Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,559 in Hennessy Bp Energy on November 1, 2024 and sell it today you would earn a total of 258.00 from holding Hennessy Bp Energy or generate 10.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Templeton World Fund vs. Hennessy Bp Energy
Performance |
| Timeline |
| Templeton World |
| Hennessy Bp Energy |
Templeton World and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton World and Hennessy
The main advantage of trading using opposite Templeton World and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton World 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.| Templeton World vs. Thrivent Natural Resources | Templeton World vs. Hennessy Bp Energy | Templeton World vs. Energy Services Fund | Templeton World vs. Goldman Sachs Mlp |
| 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 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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