Correlation Between Hennessy Capital and Finwise Bancorp

Can any of the company-specific risk be diversified away by investing in both Hennessy Capital and Finwise Bancorp 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 Finwise Bancorp 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 Finwise Bancorp, you can compare the effects of market volatilities on Hennessy Capital and Finwise Bancorp 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 Finwise Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Capital and Finwise Bancorp.

Diversification Opportunities for Hennessy Capital and Finwise Bancorp

-0.11

Correlation Coefficient

Hennessy Capital  Finwise Bancorp

Good diversification

The 3 months correlation between Hennessy and Finwise is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Capital Investment and Finwise Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finwise Bancorp 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 Finwise Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finwise Bancorp has no effect on the direction of Hennessy Capital i.e., Hennessy Capital and Finwise Bancorp go up and down completely randomly.

Pair Corralation between Hennessy Capital and Finwise Bancorp

Assuming the 90 days horizon Hennessy Capital Investment is expected to generate 0.01 times more return on investment than Finwise Bancorp. However, Hennessy Capital Investment is 75.46 times less risky than Finwise Bancorp. It trades about -0.22 of its potential returns per unit of risk. Finwise Bancorp is currently generating about -0.11 per unit of risk. If you would invest  1,059  in Hennessy Capital Investment on October 11, 2024 and sell it today you would lose (2.00) from holding Hennessy Capital Investment or give up 0.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Hennessy Capital Investment  vs.  Finwise Bancorp

Hennessy Capital Inv

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Capital Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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.

Finwise Bancorp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finwise Bancorp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Finwise Bancorp is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Hennessy Capital and Finwise Bancorp

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

The idea behind Hennessy Capital Investment and Finwise Bancorp 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.