Correlation Between Hargreaves Lansdown and Standard Life

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

Diversification Opportunities for Hargreaves Lansdown and Standard Life

0.54

Correlation Coefficient

Hargreaves Lansdown  Standard Life

Very weak diversification

The 3 months correlation between Hargreaves and Standard is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hargreaves Lansdown plc and Standard Life Aberdeen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Life Aberdeen 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 Standard Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Life Aberdeen has no effect on the direction of Hargreaves Lansdown i.e., Hargreaves Lansdown and Standard Life go up and down completely randomly.

Pair Corralation between Hargreaves Lansdown and Standard Life

Assuming the 90 days horizon Hargreaves Lansdown plc is expected to generate 0.96 times more return on investment than Standard Life. However, Hargreaves Lansdown plc is 1.05 times less risky than Standard Life. It trades about 0.07 of its potential returns per unit of risk. Standard Life Aberdeen is currently generating about -0.18 per unit of risk. If you would invest  1,321  in Hargreaves Lansdown plc on October 10, 2024 and sell it today you would earn a total of  91.00  from holding Hargreaves Lansdown plc or generate 6.89% 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.  Standard Life Aberdeen

Hargreaves Lansdown plc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hargreaves Lansdown plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Hargreaves Lansdown may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Standard Life Aberdeen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Life Aberdeen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Hargreaves Lansdown and Standard Life

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

The idea behind Hargreaves Lansdown plc and Standard Life Aberdeen 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.