Correlation Between Springwater Special and Hennessy Capital

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

By analyzing existing cross correlation between Springwater Special Situations and Hennessy Capital Investment, you can compare the effects of market volatilities on Springwater Special and Hennessy Capital 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 Springwater Special with a short position of Hennessy Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Springwater Special and Hennessy Capital.

Diversification Opportunities for Springwater Special and Hennessy Capital

0.0

Correlation Coefficient

Springwater Special  Hennessy Capital

Pay attention - limited upside

The 3 months correlation between Springwater and Hennessy is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Springwater Special Situations and Hennessy Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Capital Inv and Springwater Special 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 Springwater Special Situations are associated (or correlated) with Hennessy Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Capital Inv has no effect on the direction of Springwater Special i.e., Springwater Special and Hennessy Capital go up and down completely randomly.

Pair Corralation between Springwater Special and Hennessy Capital

If you would invest  13.00  in Hennessy Capital Investment on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Hennessy Capital Investment or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Springwater Special Situations  vs.  Hennessy Capital Investment

Springwater Special

Risk-Adjusted Performance

Very Weak

Over the last 90 days Springwater Special Situations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Springwater Special is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Hennessy Capital Inv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Capital Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Hennessy Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Springwater Special and Hennessy Capital

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

The idea behind Springwater Special Situations and Hennessy Capital Investment 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .