Correlation Between ThredUp and Hargreaves Lansdown

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

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

Diversification Opportunities for ThredUp and Hargreaves Lansdown

-0.53

Correlation Coefficient

ThredUp  Hargreaves Lansdown

Excellent diversification

The 3 months correlation between ThredUp and Hargreaves is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ThredUp 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 ThredUp 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 ThredUp 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 ThredUp i.e., ThredUp and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between ThredUp and Hargreaves Lansdown

Given the investment horizon of 90 days ThredUp is expected to generate 5.07 times more return on investment than Hargreaves Lansdown. However, ThredUp is 5.07 times more volatile than Hargreaves Lansdown plc. It trades about 0.15 of its potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.07 per unit of risk. If you would invest  74.00  in ThredUp on October 10, 2024 and sell it today you would earn a total of  65.00  from holding ThredUp or generate 87.84% return on investment over 90 days.

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

ThredUp  vs.  Hargreaves Lansdown plc

ThredUp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ThredUp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, ThredUp reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with ThredUp and Hargreaves Lansdown

The main advantage of trading using opposite ThredUp and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ThredUp 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 ThredUp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.