Correlation Between Hennessy Capital and Enterprise

Can any of the company-specific risk be diversified away by investing in both Hennessy Capital and Enterprise 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 Hennessy Capital and Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hennessy Capital Investment and Enterprise 40 Technology, you can compare the effects of market volatilities on Hennessy Capital and Enterprise 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 Hennessy Capital with a short position of Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Capital and Enterprise.

Diversification Opportunities for Hennessy Capital and Enterprise

-0.2

Correlation Coefficient

Hennessy Capital  Enterprise

Good diversification

The 3 months correlation between Hennessy and Enterprise is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Capital Investment and Enterprise 40 Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enterprise 40 Technology and Hennessy Capital 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 Hennessy Capital Investment are associated (or correlated) with Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enterprise 40 Technology has no effect on the direction of Hennessy Capital i.e., Hennessy Capital and Enterprise go up and down completely randomly.

Pair Corralation between Hennessy Capital and Enterprise

If you would invest  1,062  in Hennessy Capital Investment on August 31, 2024 and sell it today you would lose (7.00) from holding Hennessy Capital Investment or give up 0.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Hennessy Capital Investment  vs.  Enterprise 40 Technology

Hennessy Capital Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hennessy Capital Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Hennessy Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Enterprise 40 Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enterprise 40 Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Enterprise is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Hennessy Capital and Enterprise

The main advantage of trading using opposite Hennessy Capital and Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Capital position performs unexpectedly, Enterprise 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 Enterprise will offset losses from the drop in Enterprise's long position.

The idea behind Hennessy Capital Investment and Enterprise 40 Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.