Correlation Between General American and Hargreaves Lansdown

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

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

Diversification Opportunities for General American and Hargreaves Lansdown

0.0

Correlation Coefficient

General American  Hargreaves Lansdown

Pay attention - limited upside

The 3 months correlation between General and Hargreaves is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding General American Investors 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 General American 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 General American Investors 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 General American i.e., General American and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between General American and Hargreaves Lansdown

If you would invest (100.00) in Hargreaves Lansdown PLC on December 22, 2024 and sell it today you would earn a total of  100.00  from holding Hargreaves Lansdown PLC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

General American Investors  vs.  Hargreaves Lansdown PLC

General American Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days General American Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, General American is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Hargreaves Lansdown PLC

Risk-Adjusted Performance

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 General American and Hargreaves Lansdown

The main advantage of trading using opposite General American and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General American 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 General American Investors 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .