Correlation Between Armada Hflr and Hennessy Nerstone

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

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

Diversification Opportunities for Armada Hflr and Hennessy Nerstone

0.57

Correlation Coefficient

Armada Hflr  Hennessy Nerstone

Very weak diversification

The 3 months correlation between Armada and Hennessy is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Hennessy Nerstone Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Nerstone Value and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Hennessy Nerstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Nerstone Value has no effect on the direction of Armada Hflr i.e., Armada Hflr and Hennessy Nerstone go up and down completely randomly.

Pair Corralation between Armada Hflr and Hennessy Nerstone

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Hennessy Nerstone. In addition to that, Armada Hflr is 2.02 times more volatile than Hennessy Nerstone Value. It trades about -0.02 of its total potential returns per unit of risk. Hennessy Nerstone Value is currently generating about 0.0 per unit of volatility. If you would invest  2,040  in Hennessy Nerstone Value on September 29, 2024 and sell it today you would lose (10.00) from holding Hennessy Nerstone Value or give up 0.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

Armada Hflr Pr  vs.  Hennessy Nerstone Value

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Armada Hflr is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Hennessy Nerstone Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hennessy Nerstone Value 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.

Pair Trading with Armada Hflr and Hennessy Nerstone

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

The idea behind Armada Hflr Pr and Hennessy Nerstone Value 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.