Correlation Between Barratt Developments and Hargreaves Lansdown

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

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

Diversification Opportunities for Barratt Developments and Hargreaves Lansdown

-0.41

Correlation Coefficient

Barratt Developments  Hargreaves Lansdown

Very good diversification

The 3 months correlation between Barratt and Hargreaves is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Barratt Developments PLC 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 Barratt Developments 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 Barratt Developments PLC 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 Barratt Developments i.e., Barratt Developments and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between Barratt Developments and Hargreaves Lansdown

If you would invest  2,355  in Hargreaves Lansdown PLC on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Hargreaves Lansdown PLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Barratt Developments PLC  vs.  Hargreaves Lansdown PLC

Barratt Developments PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barratt Developments PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hargreaves Lansdown PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hargreaves Lansdown PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Hargreaves Lansdown is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Barratt Developments and Hargreaves Lansdown

The main advantage of trading using opposite Barratt Developments and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barratt Developments 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 Barratt Developments PLC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.