Correlation Between Raymond James and Houlihan Lokey

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

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

Diversification Opportunities for Raymond James and Houlihan Lokey

0.9

Correlation Coefficient

Raymond James  Houlihan Lokey

Almost no diversification

The 3 months correlation between Raymond and Houlihan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and Houlihan Lokey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Houlihan Lokey and Raymond James 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 Raymond James Financial are associated (or correlated) with Houlihan Lokey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Houlihan Lokey has no effect on the direction of Raymond James i.e., Raymond James and Houlihan Lokey go up and down completely randomly.

Pair Corralation between Raymond James and Houlihan Lokey

Considering the 90-day investment horizon Raymond James Financial is expected to under-perform the Houlihan Lokey. But the stock apears to be less risky and, when comparing its historical volatility, Raymond James Financial is 1.08 times less risky than Houlihan Lokey. The stock trades about -0.1 of its potential returns per unit of risk. The Houlihan Lokey is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  17,313  in Houlihan Lokey on December 29, 2024 and sell it today you would lose (1,228) from holding Houlihan Lokey or give up 7.09% of portfolio value over 90 days.

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

Raymond James Financial  vs.  Houlihan Lokey

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.

Houlihan Lokey

Risk-Adjusted Performance

Very Weak

Over the last 90 days Houlihan Lokey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Raymond James and Houlihan Lokey

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

The idea behind Raymond James Financial and Houlihan Lokey 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.