Correlation Between Salient Mlp and Hennessy

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

By analyzing existing cross correlation between Salient Mlp Energy and Hennessy Bp Energy, you can compare the effects of market volatilities on Salient Mlp and Hennessy 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 Salient Mlp with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Mlp and Hennessy.

Diversification Opportunities for Salient Mlp and Hennessy

0.93

Correlation Coefficient

Salient Mlp  Hennessy

Almost no diversification

The 3 months correlation between Salient and Hennessy is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Salient Mlp Energy and Hennessy Bp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Energy and Salient Mlp 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 Salient Mlp Energy are associated (or correlated) with Hennessy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Bp Energy has no effect on the direction of Salient Mlp i.e., Salient Mlp and Hennessy go up and down completely randomly.

Pair Corralation between Salient Mlp and Hennessy

Assuming the 90 days horizon Salient Mlp is expected to generate 1.27 times less return on investment than Hennessy. In addition to that, Salient Mlp is 1.24 times more volatile than Hennessy Bp Energy. It trades about 0.08 of its total potential returns per unit of risk. Hennessy Bp Energy is currently generating about 0.12 per unit of volatility. If you would invest  2,620  in Hennessy Bp Energy on December 22, 2024 and sell it today you would earn a total of  218.00  from holding Hennessy Bp Energy or generate 8.32% return on investment over 90 days.

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

Salient Mlp Energy  vs.  Hennessy Bp Energy

Salient Mlp Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Salient Mlp Energy are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Salient Mlp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hennessy Bp Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 9 (%) 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 April 2025.

Pair Trading with Salient Mlp and Hennessy

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

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