Correlation Between Virtus Dfa and Hennessy

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

By analyzing existing cross correlation between Virtus Dfa 2040 and Hennessy Bp Energy, you can compare the effects of market volatilities on Virtus Dfa 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 Dfa with a short position of Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus Dfa and Hennessy.

Diversification Opportunities for Virtus Dfa and Hennessy

0.01

Correlation Coefficient

Virtus Dfa  Hennessy

Significant diversification

The 3 months correlation between Virtus and Hennessy is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Virtus Dfa 2040 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 Virtus Dfa 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 Dfa 2040 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 Virtus Dfa i.e., Virtus Dfa and Hennessy go up and down completely randomly.

Pair Corralation between Virtus Dfa and Hennessy

Assuming the 90 days horizon Virtus Dfa 2040 is expected to under-perform the Hennessy. In addition to that, Virtus Dfa is 1.27 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 0.13 per unit of volatility. If you would invest  2,627  in Hennessy Bp Energy on October 25, 2024 and sell it today you would earn a total of  243.00  from holding Hennessy Bp Energy or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Virtus Dfa 2040  vs.  Hennessy Bp Energy

Virtus Dfa 2040

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus Dfa 2040 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hennessy Bp Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 10 (%) 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 February 2025.

Pair Trading with Virtus Dfa and Hennessy

The main advantage of trading using opposite Virtus Dfa and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virtus Dfa 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 Dfa 2040 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.