Correlation Between Hennessy and Oppenheimer Senior

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

Diversification Opportunities for Hennessy and Oppenheimer Senior

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Hennessy and Oppenheimer is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Oppenheimer Senior Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oppenheimer Senior 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 Oppenheimer Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oppenheimer Senior has no effect on the direction of Hennessy i.e., Hennessy and Oppenheimer Senior go up and down completely randomly.

Pair Corralation between Hennessy and Oppenheimer Senior

Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 10.28 times more return on investment than Oppenheimer Senior. However, Hennessy is 10.28 times more volatile than Oppenheimer Senior Floating. It trades about 0.02 of its potential returns per unit of risk. Oppenheimer Senior Floating is currently generating about 0.07 per unit of risk. If you would invest  2,700  in Hennessy Bp Energy on October 9, 2024 and sell it today you would earn a total of  35.00  from holding Hennessy Bp Energy or generate 1.3% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Hennessy Bp Energy  vs.  Oppenheimer Senior Floating

 Performance 
       Timeline  
Hennessy Bp Energy 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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.
Oppenheimer Senior 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Senior Floating are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Oppenheimer Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hennessy and Oppenheimer Senior Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hennessy and Oppenheimer Senior

The main advantage of trading using opposite Hennessy and Oppenheimer Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy position performs unexpectedly, Oppenheimer Senior 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 Oppenheimer Senior will offset losses from the drop in Oppenheimer Senior's long position.
The idea behind Hennessy Bp Energy and Oppenheimer Senior Floating 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.
Check out your portfolio center.
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.

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