Correlation Between Ancora Microcap and Hennessy

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

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

Diversification Opportunities for Ancora Microcap and Hennessy

0.68

Correlation Coefficient

Ancora Microcap  Hennessy

Poor diversification

The 3 months correlation between Ancora and Hennessy is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ancora Microcap Fund and Hennessy Bp Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Energy and Ancora Microcap 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 Ancora Microcap 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 Energy has no effect on the direction of Ancora Microcap i.e., Ancora Microcap and Hennessy go up and down completely randomly.

Pair Corralation between Ancora Microcap and Hennessy

Assuming the 90 days horizon Ancora Microcap Fund is expected to generate 0.58 times more return on investment than Hennessy. However, Ancora Microcap Fund is 1.71 times less risky than Hennessy. It trades about 0.03 of its potential returns per unit of risk. Hennessy Bp Energy is currently generating about -0.07 per unit of risk. If you would invest  1,679  in Ancora Microcap Fund on March 13, 2024 and sell it today you would earn a total of  7.00  from holding Ancora Microcap Fund or generate 0.42% return on investment over 90 days.

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

Ancora Microcap Fund  vs.  Hennessy Bp Energy

Ancora Microcap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ancora Microcap Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Ancora Microcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hennessy Bp Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hennessy Bp Energy are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Hennessy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ancora Microcap and Hennessy

The main advantage of trading using opposite Ancora Microcap and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ancora Microcap 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 Ancora Microcap Fund and Hennessy Bp Energy 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.