Correlation Between Victory Rs and Hennessy Gas

Can any of the company-specific risk be diversified away by investing in both Victory Rs and Hennessy Gas 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 Victory Rs and Hennessy Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Victory Rs Partners and Hennessy Gas Utility, you can compare the effects of market volatilities on Victory Rs and Hennessy Gas 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 Victory Rs with a short position of Hennessy Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory Rs and Hennessy Gas.

Diversification Opportunities for Victory Rs and Hennessy Gas

-0.12

Correlation Coefficient

Victory Rs  Hennessy Gas

Good diversification

The 3 months correlation between Victory and Hennessy is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Victory Rs Partners and Hennessy Gas Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Gas Utility and Victory Rs 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 Victory Rs Partners are associated (or correlated) with Hennessy Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Gas Utility has no effect on the direction of Victory Rs i.e., Victory Rs and Hennessy Gas go up and down completely randomly.

Pair Corralation between Victory Rs and Hennessy Gas

Assuming the 90 days horizon Victory Rs Partners is expected to under-perform the Hennessy Gas. In addition to that, Victory Rs is 1.01 times more volatile than Hennessy Gas Utility. It trades about -0.05 of its total potential returns per unit of risk. Hennessy Gas Utility is currently generating about 0.13 per unit of volatility. If you would invest  2,662  in Hennessy Gas Utility on December 21, 2024 and sell it today you would earn a total of  197.00  from holding Hennessy Gas Utility or generate 7.4% return on investment over 90 days.

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

Victory Rs Partners  vs.  Hennessy Gas Utility

Victory Rs Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victory Rs Partners has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Victory Rs is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hennessy Gas Utility

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Gas Utility are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hennessy Gas may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Victory Rs and Hennessy Gas

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

The idea behind Victory Rs Partners and Hennessy Gas Utility 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.