Correlation Between Investor and Hargreaves Lansdown

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

By analyzing existing cross correlation between Investor AB ser and Hargreaves Lansdown plc, you can compare the effects of market volatilities on Investor and Hargreaves Lansdown 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 Investor with a short position of Hargreaves Lansdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investor and Hargreaves Lansdown.

Diversification Opportunities for Investor and Hargreaves Lansdown

0.08

Correlation Coefficient

Investor  Hargreaves Lansdown

Significant diversification

The 3 months correlation between Investor and Hargreaves is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB ser and Hargreaves Lansdown plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hargreaves Lansdown plc and Investor 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 Investor AB ser are associated (or correlated) with Hargreaves Lansdown. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hargreaves Lansdown plc has no effect on the direction of Investor i.e., Investor and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between Investor and Hargreaves Lansdown

Assuming the 90 days horizon Investor AB ser is expected to generate 0.58 times more return on investment than Hargreaves Lansdown. However, Investor AB ser is 1.73 times less risky than Hargreaves Lansdown. It trades about 0.28 of its potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.08 per unit of risk. If you would invest  2,660  in Investor AB ser on October 25, 2024 and sell it today you would earn a total of  215.00  from holding Investor AB ser or generate 8.08% return on investment over 90 days.

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

Investor AB ser  vs.  Hargreaves Lansdown plc

Investor AB ser

Risk-Adjusted Performance

3 of 100

Insignificant

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

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.

Pair Trading with Investor and Hargreaves Lansdown

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

The idea behind Investor AB ser and Hargreaves Lansdown 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.