Correlation Between Hargreaves Lansdown and Blackrock Muniyield

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

Diversification Opportunities for Hargreaves Lansdown and Blackrock Muniyield

0.56

Correlation Coefficient

Hargreaves Lansdown  Blackrock Muniyield

Very weak diversification

The 3 months correlation between Hargreaves and Blackrock is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hargreaves Lansdown plc and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield 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 Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of Hargreaves Lansdown i.e., Hargreaves Lansdown and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Hargreaves Lansdown and Blackrock Muniyield

Assuming the 90 days horizon Hargreaves Lansdown plc is expected to generate 2.08 times more return on investment than Blackrock Muniyield. However, Hargreaves Lansdown is 2.08 times more volatile than Blackrock Muniyield Quality. It trades about -0.06 of its potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about -0.16 per unit of risk. If you would invest  1,315  in Hargreaves Lansdown plc on October 9, 2024 and sell it today you would lose (29.00) from holding Hargreaves Lansdown plc or give up 2.21% of portfolio value over 90 days.

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

Hargreaves Lansdown plc  vs.  Blackrock Muniyield Quality

Hargreaves Lansdown plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hargreaves Lansdown plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Blackrock Muniyield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniyield Quality has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hargreaves Lansdown and Blackrock Muniyield

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

The idea behind Hargreaves Lansdown plc and Blackrock Muniyield Quality 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.