Correlation Between TRON and Hennessy Stance

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

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

Diversification Opportunities for TRON and Hennessy Stance

0.3

Correlation Coefficient

TRON  Hennessy Stance

Weak diversification

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

Pair Corralation between TRON and Hennessy Stance

Assuming the 90 days trading horizon TRON is expected to under-perform the Hennessy Stance. In addition to that, TRON is 5.26 times more volatile than Hennessy Stance ESG. It trades about -0.03 of its total potential returns per unit of risk. Hennessy Stance ESG is currently generating about 0.15 per unit of volatility. If you would invest  3,089  in Hennessy Stance ESG on October 27, 2024 and sell it today you would earn a total of  64.00  from holding Hennessy Stance ESG or generate 2.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

TRON  vs.  Hennessy Stance ESG

TRON

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Hennessy Stance ESG

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Stance ESG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hennessy Stance is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TRON and Hennessy Stance

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

The idea behind TRON and Hennessy Stance ESG 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.