Correlation Between Hargreaves Lansdown and General American

Can any of the company-specific risk be diversified away by investing in both Hargreaves Lansdown and General American 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 General American 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 General American Investors, you can compare the effects of market volatilities on Hargreaves Lansdown and General American 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 General American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hargreaves Lansdown and General American.

Diversification Opportunities for Hargreaves Lansdown and General American

-0.17

Correlation Coefficient

Hargreaves Lansdown  General American

Good diversification

The 3 months correlation between Hargreaves and General is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hargreaves Lansdown plc and General American Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General American Inv 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 General American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General American Inv has no effect on the direction of Hargreaves Lansdown i.e., Hargreaves Lansdown and General American go up and down completely randomly.

Pair Corralation between Hargreaves Lansdown and General American

Assuming the 90 days horizon Hargreaves Lansdown is expected to generate 2.07 times less return on investment than General American. In addition to that, Hargreaves Lansdown is 1.89 times more volatile than General American Investors. It trades about 0.04 of its total potential returns per unit of risk. General American Investors is currently generating about 0.17 per unit of volatility. If you would invest  4,897  in General American Investors on October 24, 2024 and sell it today you would earn a total of  428.00  from holding General American Investors or generate 8.74% return on investment over 90 days.

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

Hargreaves Lansdown plc  vs.  General American Investors

Hargreaves Lansdown plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hargreaves Lansdown plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Hargreaves Lansdown is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

General American Inv

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General American Investors are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, General American may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hargreaves Lansdown and General American

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

The idea behind Hargreaves Lansdown plc and General American Investors 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.