Correlation Between Hennessy and Tomorrows Scholar

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

Diversification Opportunities for Hennessy and Tomorrows Scholar

0.3

Correlation Coefficient

Hennessy  Tomorrows Scholar

Weak diversification

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

Pair Corralation between Hennessy and Tomorrows Scholar

Assuming the 90 days horizon Hennessy Bp Energy is expected to generate 0.93 times more return on investment than Tomorrows Scholar. However, Hennessy Bp Energy is 1.08 times less risky than Tomorrows Scholar. It trades about 0.13 of its potential returns per unit of risk. Tomorrows Scholar College is currently generating about 0.12 per unit of risk. If you would invest  2,627  in Hennessy Bp Energy on October 25, 2024 and sell it today you would earn a total of  243.00  from holding Hennessy Bp Energy or generate 9.25% 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.  Tomorrows Scholar College

Hennessy Bp Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 10 (%) 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.

Tomorrows Scholar College

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tomorrows Scholar College are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Tomorrows Scholar may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hennessy and Tomorrows Scholar

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

The idea behind Hennessy Bp Energy and Tomorrows Scholar College 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.