Correlation Between Hennessy and Jpmorgan Government

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

Diversification Opportunities for Hennessy and Jpmorgan Government

0.23

Correlation Coefficient

Hennessy  Jpmorgan Government

Modest diversification

The 3 months correlation between Hennessy and Jpmorgan is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Jpmorgan Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Government Bond 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 Jpmorgan Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Government Bond has no effect on the direction of Hennessy i.e., Hennessy and Jpmorgan Government go up and down completely randomly.

Pair Corralation between Hennessy and Jpmorgan Government

Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 4.67 times more return on investment than Jpmorgan Government. However, Hennessy is 4.67 times more volatile than Jpmorgan Government Bond. It trades about -0.03 of its potential returns per unit of risk. Jpmorgan Government Bond is currently generating about -0.51 per unit of risk. If you would invest  2,756  in Hennessy Bp Energy on October 9, 2024 and sell it today you would lose (21.00) from holding Hennessy Bp Energy or give up 0.76% of portfolio value over 90 days.

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

Hennessy Bp Energy  vs.  Jpmorgan Government Bond

Hennessy Bp Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Hennessy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Government Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Government Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Jpmorgan Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hennessy and Jpmorgan Government

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

The idea behind Hennessy Bp Energy and Jpmorgan Government Bond 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.