Correlation Between Hennessy Nerstone and Hennessy

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

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

Diversification Opportunities for Hennessy Nerstone and Hennessy

0.39

Correlation Coefficient

Hennessy Nerstone  Hennessy

Weak diversification

The 3 months correlation between Hennessy and Hennessy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Nerstone Growth 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 Hennessy Nerstone 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 Growth 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 Hennessy Nerstone i.e., Hennessy Nerstone and Hennessy go up and down completely randomly.

Pair Corralation between Hennessy Nerstone and Hennessy

Assuming the 90 days horizon Hennessy Nerstone Growth is expected to under-perform the Hennessy. In addition to that, Hennessy Nerstone is 1.65 times more volatile than Hennessy Bp Midstream. It trades about -0.08 of its total potential returns per unit of risk. Hennessy Bp Midstream is currently generating about 0.12 per unit of volatility. If you would invest  1,155  in Hennessy Bp Midstream on September 28, 2024 and sell it today you would earn a total of  105.00  from holding Hennessy Bp Midstream or generate 9.09% return on investment over 90 days.

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

Hennessy Nerstone Growth  vs.  Hennessy Bp Midstream

Hennessy Nerstone Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hennessy Nerstone Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental 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 Midstream

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Midstream are ranked lower than 9 (%) 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 January 2025.

Pair Trading with Hennessy Nerstone and Hennessy

The main advantage of trading using opposite Hennessy Nerstone and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Nerstone 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 Hennessy Nerstone Growth 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.