Correlation Between Hargreaves Lansdown and Barratt Developments

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

Diversification Opportunities for Hargreaves Lansdown and Barratt Developments

-0.3

Correlation Coefficient

Hargreaves Lansdown  Barratt Developments

Very good diversification

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

Pair Corralation between Hargreaves Lansdown and Barratt Developments

If you would invest  2,355  in Hargreaves Lansdown PLC on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Hargreaves Lansdown PLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Hargreaves Lansdown PLC  vs.  Barratt Developments PLC

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. In spite of fairly strong essential indicators, Hargreaves Lansdown is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Barratt Developments PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barratt Developments PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hargreaves Lansdown and Barratt Developments

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

The idea behind Hargreaves Lansdown PLC and Barratt Developments PLC 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.