Correlation Between International Government and Hennessy Gas
Can any of the company-specific risk be diversified away by investing in both International Government and Hennessy Gas 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 International Government and Hennessy Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Government Bond and Hennessy Gas Utility, you can compare the effects of market volatilities on International Government and Hennessy Gas 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 International Government with a short position of Hennessy Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Government and Hennessy Gas.
Diversification Opportunities for International Government and Hennessy Gas
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Hennessy is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding International Government Bond and Hennessy Gas Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Gas Utility and International Government 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 International Government Bond are associated (or correlated) with Hennessy Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Gas Utility has no effect on the direction of International Government i.e., International Government and Hennessy Gas go up and down completely randomly.
Pair Corralation between International Government and Hennessy Gas
Assuming the 90 days horizon International Government is expected to generate 1.78 times less return on investment than Hennessy Gas. But when comparing it to its historical volatility, International Government Bond is 2.51 times less risky than Hennessy Gas. It trades about 0.05 of its potential returns per unit of risk. Hennessy Gas Utility is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,772 in Hennessy Gas Utility on April 19, 2025 and sell it today you would earn a total of 48.00 from holding Hennessy Gas Utility or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.39% |
| Values | Daily Returns |
International Government Bond vs. Hennessy Gas Utility
Performance |
| Timeline |
| International Government |
| Hennessy Gas Utility |
International Government and Hennessy Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Government and Hennessy Gas
The main advantage of trading using opposite International Government and Hennessy Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Government position performs unexpectedly, Hennessy Gas 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 Gas will offset losses from the drop in Hennessy Gas' long position.| International Government vs. Auer Growth Fund | International Government vs. Lord Abbett Diversified | International Government vs. Qs Growth Fund | International Government vs. Nasdaq 100 Index Fund |
| Hennessy Gas vs. Dominion Energy | Hennessy Gas vs. Consolidated Edison | Hennessy Gas vs. Eversource Energy | Hennessy Gas vs. FirstEnergy |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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