Correlation Between Hennessy and Tiaa Cref

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

Diversification Opportunities for Hennessy and Tiaa Cref

0.3

Correlation Coefficient

Hennessy  Tiaa Cref

Weak diversification

The 3 months correlation between Hennessy and Tiaa is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Tiaa Cref Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tiaa Cref Emerging 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 Tiaa Cref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tiaa Cref Emerging has no effect on the direction of Hennessy i.e., Hennessy and Tiaa Cref go up and down completely randomly.

Pair Corralation between Hennessy and Tiaa Cref

Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 4.82 times more return on investment than Tiaa Cref. However, Hennessy is 4.82 times more volatile than Tiaa Cref Emerging Markets. It trades about 0.35 of its potential returns per unit of risk. Tiaa Cref Emerging Markets is currently generating about 0.26 per unit of risk. If you would invest  2,607  in Hennessy Bp Energy on September 5, 2024 and sell it today you would earn a total of  240.00  from holding Hennessy Bp Energy or generate 9.21% return on investment over 90 days.

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

Hennessy Bp Energy  vs.  Tiaa Cref Emerging Markets

Hennessy Bp Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 13 (%) 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 January 2025.

Tiaa Cref Emerging

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tiaa Cref Emerging Markets are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Tiaa Cref is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hennessy and Tiaa Cref

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

The idea behind Hennessy Bp Energy and Tiaa Cref Emerging Markets 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.