Correlation Between Hennessy and Destinations International

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

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

Diversification Opportunities for Hennessy and Destinations International

-0.01

Correlation Coefficient

Hennessy  Destinations International

Good diversification

The 3 months correlation between Hennessy and Destinations is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Destinations International Equ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Destinations International and Hennessy 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 Bp Energy are associated (or correlated) with Destinations International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Destinations International has no effect on the direction of Hennessy i.e., Hennessy and Destinations International go up and down completely randomly.

Pair Corralation between Hennessy and Destinations International

Assuming the 90 days horizon Hennessy is expected to generate 1.08 times less return on investment than Destinations International. In addition to that, Hennessy is 1.4 times more volatile than Destinations International Equity. It trades about 0.11 of its total potential returns per unit of risk. Destinations International Equity is currently generating about 0.16 per unit of volatility. If you would invest  1,081  in Destinations International Equity on December 24, 2024 and sell it today you would earn a total of  88.00  from holding Destinations International Equity or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Hennessy Bp Energy  vs.  Destinations International Equ

Hennessy Bp Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Hennessy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Destinations International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Destinations International Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Destinations International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Hennessy and Destinations International

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

The idea behind Hennessy Bp Energy and Destinations International Equity 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.