Correlation Between Tri Continental and Hargreaves Lansdown

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

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

Diversification Opportunities for Tri Continental and Hargreaves Lansdown

-0.04

Correlation Coefficient

Tri Continental  Hargreaves Lansdown

Good diversification

The 3 months correlation between Tri and Hargreaves is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Tri Continental Closed 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 Tri Continental 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 Tri Continental Closed 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 Tri Continental i.e., Tri Continental and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between Tri Continental and Hargreaves Lansdown

Allowing for the 90-day total investment horizon Tri Continental Closed is expected to under-perform the Hargreaves Lansdown. But the stock apears to be less risky and, when comparing its historical volatility, Tri Continental Closed is 1.12 times less risky than Hargreaves Lansdown. The stock trades about -0.25 of its potential returns per unit of risk. The Hargreaves Lansdown plc is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,315  in Hargreaves Lansdown plc on October 9, 2024 and sell it today you would lose (29.00) from holding Hargreaves Lansdown plc or give up 2.21% of portfolio value over 90 days.

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

Tri Continental Closed  vs.  Hargreaves Lansdown plc

Tri Continental Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tri Continental Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Tri Continental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. Despite latest weak performance, the Stock's essential 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 Tri Continental and Hargreaves Lansdown

The main advantage of trading using opposite Tri Continental and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tri Continental 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 Tri Continental Closed 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.