Correlation Between Hennessy Cornerstone and Hennessy

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

By analyzing existing cross correlation between Hennessy Nerstone Mid and Hennessy Bp Midstream, you can compare the effects of market volatilities on Hennessy Cornerstone 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 Hennessy Cornerstone with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Hennessy.

Diversification Opportunities for Hennessy Cornerstone and Hennessy

0.86

Correlation Coefficient

Hennessy Cornerstone  Hennessy

Very poor diversification

The 3 months correlation between Hennessy and Hennessy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Hennessy Bp Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Midstream and Hennessy Cornerstone 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 Nerstone Mid 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 Midstream has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Hennessy go up and down completely randomly.

Pair Corralation between Hennessy Cornerstone and Hennessy

Assuming the 90 days horizon Hennessy Cornerstone is expected to generate 1.69 times less return on investment than Hennessy. In addition to that, Hennessy Cornerstone is 1.11 times more volatile than Hennessy Bp Midstream. It trades about 0.31 of its total potential returns per unit of risk. Hennessy Bp Midstream is currently generating about 0.59 per unit of volatility. If you would invest  1,240  in Hennessy Bp Midstream on August 30, 2024 and sell it today you would earn a total of  180.00  from holding Hennessy Bp Midstream or generate 14.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Hennessy Nerstone Mid  vs.  Hennessy Bp Midstream

Hennessy Nerstone Mid

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Nerstone Mid are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Hennessy Cornerstone may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Hennessy Bp Midstream

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Midstream are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hennessy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hennessy Cornerstone and Hennessy

The main advantage of trading using opposite Hennessy Cornerstone and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone 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.

The idea behind Hennessy Nerstone Mid and Hennessy Bp Midstream 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 CEOs Directory module to screen CEOs from public companies around the world.