Correlation Between Evercore Partners and LPL Financial

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

By analyzing existing cross correlation between Evercore Partners and LPL Financial Holdings, you can compare the effects of market volatilities on Evercore Partners and LPL Financial 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 Evercore Partners with a short position of LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evercore Partners and LPL Financial.

Diversification Opportunities for Evercore Partners and LPL Financial

0.47

Correlation Coefficient

Evercore Partners  LPL Financial

Very weak diversification

The 3 months correlation between Evercore and LPL is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Evercore Partners and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings and Evercore Partners 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 Evercore Partners are associated (or correlated) with LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Evercore Partners i.e., Evercore Partners and LPL Financial go up and down completely randomly.

Pair Corralation between Evercore Partners and LPL Financial

Considering the 90-day investment horizon Evercore Partners is expected to under-perform the LPL Financial. In addition to that, Evercore Partners is 1.18 times more volatile than LPL Financial Holdings. It trades about -0.19 of its total potential returns per unit of risk. LPL Financial Holdings is currently generating about 0.03 per unit of volatility. If you would invest  32,666  in LPL Financial Holdings on December 28, 2024 and sell it today you would earn a total of  653.00  from holding LPL Financial Holdings or generate 2.0% return on investment over 90 days.

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

Evercore Partners  vs.  LPL Financial Holdings

Evercore Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evercore Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

LPL Financial Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, LPL Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Evercore Partners and LPL Financial

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

The idea behind Evercore Partners and LPL Financial Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.