Correlation Between Virtus Select and Hennessy

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

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

Diversification Opportunities for Virtus Select and Hennessy

0.84

Correlation Coefficient

Virtus Select  Hennessy

Very poor diversification

The 3 months correlation between Virtus and Hennessy is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Select Mlp and Hennessy Bp Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Midstream and Virtus Select 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 Virtus Select Mlp 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 Midstream has no effect on the direction of Virtus Select i.e., Virtus Select and Hennessy go up and down completely randomly.

Pair Corralation between Virtus Select and Hennessy

Assuming the 90 days horizon Virtus Select Mlp is expected to generate 0.92 times more return on investment than Hennessy. However, Virtus Select Mlp is 1.09 times less risky than Hennessy. It trades about 0.07 of its potential returns per unit of risk. Hennessy Bp Midstream is currently generating about 0.05 per unit of risk. If you would invest  1,697  in Virtus Select Mlp on October 10, 2024 and sell it today you would earn a total of  23.00  from holding Virtus Select Mlp or generate 1.36% return on investment over 90 days.

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

Virtus Select Mlp  vs.  Hennessy Bp Midstream

Virtus Select Mlp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Select Mlp are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Virtus Select may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Hennessy Bp Midstream

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Midstream are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hennessy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Virtus Select and Hennessy

The main advantage of trading using opposite Virtus Select and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Select 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 Virtus Select Mlp and Hennessy Bp Midstream 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.