Correlation Between Hennessy Cornerstone and Amg River

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Hennessy Cornerstone and Amg River 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 Hennessy Cornerstone and Amg River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Nerstone Mid and Amg River Road, you can compare the effects of market volatilities on Hennessy Cornerstone and Amg River 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 Hennessy Cornerstone with a short position of Amg River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Cornerstone and Amg River.

Diversification Opportunities for Hennessy Cornerstone and Amg River

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Hennessy and AMG is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Mid and Amg River Road in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg River Road and Hennessy Cornerstone 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 Hennessy Nerstone Mid are associated (or correlated) with Amg River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg River Road has no effect on the direction of Hennessy Cornerstone i.e., Hennessy Cornerstone and Amg River go up and down completely randomly.

Pair Corralation between Hennessy Cornerstone and Amg River

Assuming the 90 days horizon Hennessy Nerstone Mid is expected to generate 1.29 times more return on investment than Amg River. However, Hennessy Cornerstone is 1.29 times more volatile than Amg River Road. It trades about 0.12 of its potential returns per unit of risk. Amg River Road is currently generating about 0.13 per unit of risk. If you would invest  2,389  in Hennessy Nerstone Mid on September 3, 2024 and sell it today you would earn a total of  510.00  from holding Hennessy Nerstone Mid or generate 21.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Hennessy Nerstone Mid  vs.  Amg River Road

 Performance 
       Timeline  
Hennessy Nerstone Mid 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Nerstone Mid are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Hennessy Cornerstone showed solid returns over the last few months and may actually be approaching a breakup point.
Amg River Road 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Amg River Road are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Amg River showed solid returns over the last few months and may actually be approaching a breakup point.

Hennessy Cornerstone and Amg River Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hennessy Cornerstone and Amg River

The main advantage of trading using opposite Hennessy Cornerstone and Amg River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Cornerstone position performs unexpectedly, Amg River 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 Amg River will offset losses from the drop in Amg River's long position.
The idea behind Hennessy Nerstone Mid and Amg River Road 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

Other Complementary Tools

Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
Equity Valuation
Check real value of public entities based on technical and fundamental data
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets