Correlation Between Hennessy and Thrivent Natural

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

Diversification Opportunities for Hennessy and Thrivent Natural

0.47

Correlation Coefficient

Hennessy  Thrivent Natural

Very weak diversification

The 3 months correlation between Hennessy and Thrivent is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Bp Energy and Thrivent Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thrivent Natural Res 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 Thrivent Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thrivent Natural Res has no effect on the direction of Hennessy i.e., Hennessy and Thrivent Natural go up and down completely randomly.

Pair Corralation between Hennessy and Thrivent Natural

Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 16.55 times more return on investment than Thrivent Natural. However, Hennessy is 16.55 times more volatile than Thrivent Natural Resources. It trades about 0.16 of its potential returns per unit of risk. Thrivent Natural Resources is currently generating about 0.31 per unit of risk. If you would invest  2,625  in Hennessy Bp Energy on October 20, 2024 and sell it today you would earn a total of  306.00  from holding Hennessy Bp Energy or generate 11.66% return on investment over 90 days.

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

Hennessy Bp Energy  vs.  Thrivent Natural Resources

Hennessy Bp Energy

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 12 (%) 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 February 2025.

Thrivent Natural Res

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thrivent Natural Resources are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Thrivent Natural 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 Thrivent Natural

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

The idea behind Hennessy Bp Energy and Thrivent Natural Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.