Correlation Between Houlihan Lokey and Jefferies Financial

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

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

Diversification Opportunities for Houlihan Lokey and Jefferies Financial

0.3

Correlation Coefficient

Houlihan Lokey  Jefferies Financial

Weak diversification

The 3 months correlation between Houlihan and Jefferies is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial and Houlihan Lokey 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 Houlihan Lokey are associated (or correlated) with Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and Jefferies Financial go up and down completely randomly.

Pair Corralation between Houlihan Lokey and Jefferies Financial

Considering the 90-day investment horizon Houlihan Lokey is expected to generate 0.73 times more return on investment than Jefferies Financial. However, Houlihan Lokey is 1.37 times less risky than Jefferies Financial. It trades about -0.12 of its potential returns per unit of risk. Jefferies Financial Group is currently generating about -0.14 per unit of risk. If you would invest  18,852  in Houlihan Lokey on November 28, 2024 and sell it today you would lose (2,105) from holding Houlihan Lokey or give up 11.17% of portfolio value over 90 days.

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

Houlihan Lokey  vs.  Jefferies Financial Group

Houlihan Lokey

Risk-Adjusted Performance

Very Weak

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

Jefferies Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jefferies Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Houlihan Lokey and Jefferies Financial

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

The idea behind Houlihan Lokey and Jefferies Financial Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.