Correlation Between Hargreaves Lansdown and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Hargreaves Lansdown and Smithson Investment 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 Hargreaves Lansdown and Smithson Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hargreaves Lansdown plc and Smithson Investment Trust, you can compare the effects of market volatilities on Hargreaves Lansdown and Smithson Investment 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 Hargreaves Lansdown with a short position of Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hargreaves Lansdown and Smithson Investment.
Diversification Opportunities for Hargreaves Lansdown and Smithson Investment
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hargreaves and Smithson is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hargreaves Lansdown plc and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust and Hargreaves Lansdown 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 Hargreaves Lansdown plc are associated (or correlated) with Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Hargreaves Lansdown i.e., Hargreaves Lansdown and Smithson Investment go up and down completely randomly.
Pair Corralation between Hargreaves Lansdown and Smithson Investment
Assuming the 90 days trading horizon Hargreaves Lansdown is expected to generate 6.21 times less return on investment than Smithson Investment. But when comparing it to its historical volatility, Hargreaves Lansdown plc is 7.71 times less risky than Smithson Investment. It trades about 0.18 of its potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 145,000 in Smithson Investment Trust on November 18, 2024 and sell it today you would earn a total of 11,200 from holding Smithson Investment Trust or generate 7.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hargreaves Lansdown plc vs. Smithson Investment Trust
Performance |
Timeline |
Hargreaves Lansdown plc |
Smithson Investment Trust |
Hargreaves Lansdown and Smithson Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hargreaves Lansdown and Smithson Investment
The main advantage of trading using opposite Hargreaves Lansdown and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hargreaves Lansdown position performs unexpectedly, Smithson Investment 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.Hargreaves Lansdown vs. Samsung Electronics Co | ||
Hargreaves Lansdown vs. Samsung Electronics Co | ||
Hargreaves Lansdown vs. Toyota Motor Corp | ||
Hargreaves Lansdown vs. SoftBank Group Corp |
Smithson Investment vs. Jade Road Investments | ||
Smithson Investment vs. Griffin Mining | ||
Smithson Investment vs. Broadcom | ||
Smithson Investment vs. Roadside Real Estate |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Stocks Directory Find actively traded stocks across global markets |