Correlation Between Armada Hflr and Hargreaves Lansdown

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

By analyzing existing cross correlation between Armada Hflr Pr and Hargreaves Lansdown plc, you can compare the effects of market volatilities on Armada Hflr and Hargreaves Lansdown 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 Armada Hflr with a short position of Hargreaves Lansdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Armada Hflr and Hargreaves Lansdown.

Diversification Opportunities for Armada Hflr and Hargreaves Lansdown

-0.46

Correlation Coefficient

Armada Hflr  Hargreaves Lansdown

Very good diversification

The 3 months correlation between Armada and Hargreaves is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Armada Hflr Pr and Hargreaves Lansdown plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hargreaves Lansdown plc and Armada Hflr 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 Armada Hflr Pr are associated (or correlated) with Hargreaves Lansdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hargreaves Lansdown plc has no effect on the direction of Armada Hflr i.e., Armada Hflr and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between Armada Hflr and Hargreaves Lansdown

Considering the 90-day investment horizon Armada Hflr Pr is expected to under-perform the Hargreaves Lansdown. In addition to that, Armada Hflr is 9.06 times more volatile than Hargreaves Lansdown plc. It trades about -0.12 of its total potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.17 per unit of volatility. If you would invest  108,700  in Hargreaves Lansdown plc on September 27, 2024 and sell it today you would earn a total of  1,000.00  from holding Hargreaves Lansdown plc or generate 0.92% return on investment over 90 days.

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

Armada Hflr Pr  vs.  Hargreaves Lansdown plc

Armada Hflr Pr

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Hflr Pr has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Hargreaves Lansdown plc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hargreaves Lansdown plc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Hargreaves Lansdown is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Armada Hflr and Hargreaves Lansdown

The main advantage of trading using opposite Armada Hflr and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Armada Hflr position performs unexpectedly, Hargreaves Lansdown 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 Hargreaves Lansdown will offset losses from the drop in Hargreaves Lansdown's long position.

The idea behind Armada Hflr Pr and Hargreaves Lansdown plc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.