Correlation Between Hennessy and Eventide Global

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

Diversification Opportunities for Hennessy and Eventide Global

0.88

Correlation Coefficient

Hennessy  Eventide Global

Very poor diversification

The 3 months correlation between Hennessy and Eventide is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Eventide Global Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Global Dividend 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 Eventide Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Global Dividend has no effect on the direction of Hennessy i.e., Hennessy and Eventide Global go up and down completely randomly.

Pair Corralation between Hennessy and Eventide Global

Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 1.42 times more return on investment than Eventide Global. However, Hennessy is 1.42 times more volatile than Eventide Global Dividend. It trades about 0.36 of its potential returns per unit of risk. Eventide Global Dividend is currently generating about 0.32 per unit of risk. If you would invest  2,590  in Hennessy Bp Energy on August 31, 2024 and sell it today you would earn a total of  269.00  from holding Hennessy Bp Energy or generate 10.39% return on investment over 90 days.

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

Hennessy Bp Energy  vs.  Eventide Global Dividend

Hennessy Bp Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 11 (%) 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 December 2024.

Eventide Global Dividend

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eventide Global Dividend are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Eventide Global may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Hennessy and Eventide Global

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

The idea behind Hennessy Bp Energy and Eventide Global Dividend 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.