Correlation Between LPL Financial and Raymond James

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

By analyzing existing cross correlation between LPL Financial Holdings and Raymond James Financial, you can compare the effects of market volatilities on LPL Financial and Raymond James 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 LPL Financial with a short position of Raymond James. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPL Financial and Raymond James.

Diversification Opportunities for LPL Financial and Raymond James

0.61

Correlation Coefficient

LPL Financial  Raymond James

Poor diversification

The 3 months correlation between LPL and Raymond is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LPL Financial Holdings and Raymond James Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raymond James Financial and LPL Financial 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 LPL Financial Holdings are associated (or correlated) with Raymond James. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raymond James Financial has no effect on the direction of LPL Financial i.e., LPL Financial and Raymond James go up and down completely randomly.

Pair Corralation between LPL Financial and Raymond James

Given the investment horizon of 90 days LPL Financial Holdings is expected to generate 1.28 times more return on investment than Raymond James. However, LPL Financial is 1.28 times more volatile than Raymond James Financial. It trades about 0.03 of its potential returns per unit of risk. Raymond James Financial is currently generating about -0.08 per unit of risk. If you would invest  32,666  in LPL Financial Holdings on December 28, 2024 and sell it today you would earn a total of  653.00  from holding LPL Financial Holdings or generate 2.0% return on investment over 90 days.

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

LPL Financial Holdings  vs.  Raymond James Financial

LPL Financial Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LPL Financial Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, LPL Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Raymond James Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with LPL Financial and Raymond James

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

The idea behind LPL Financial Holdings and Raymond James Financial 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .