Correlation Between Pinnacle Value and Hennessy

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

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

Diversification Opportunities for Pinnacle Value and Hennessy

0.33

Correlation Coefficient

Pinnacle Value  Hennessy

Weak diversification

The 3 months correlation between Pinnacle and Hennessy is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pinnacle Value Fund 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 Pinnacle Value 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 Pinnacle Value Fund 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 Pinnacle Value i.e., Pinnacle Value and Hennessy go up and down completely randomly.

Pair Corralation between Pinnacle Value and Hennessy

Assuming the 90 days horizon Pinnacle Value Fund is expected to under-perform the Hennessy. In addition to that, Pinnacle Value is 1.95 times more volatile than Hennessy Bp Midstream. It trades about -0.28 of its total potential returns per unit of risk. Hennessy Bp Midstream is currently generating about -0.22 per unit of volatility. If you would invest  1,397  in Hennessy Bp Midstream on September 24, 2024 and sell it today you would lose (89.00) from holding Hennessy Bp Midstream or give up 6.37% of portfolio value over 90 days.

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

Pinnacle Value Fund  vs.  Hennessy Bp Midstream

Pinnacle Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinnacle Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Midstream are ranked lower than 7 (%) 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 January 2025.

Pair Trading with Pinnacle Value and Hennessy

The main advantage of trading using opposite Pinnacle Value and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinnacle Value 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 Pinnacle Value Fund 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.