Correlation Between Invesco Advantage and Hargreaves Lansdown

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

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

Diversification Opportunities for Invesco Advantage and Hargreaves Lansdown

-0.24

Correlation Coefficient

Invesco Advantage  Hargreaves Lansdown

Very good diversification

The 3 months correlation between Invesco and Hargreaves is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Invesco Advantage MIT 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 Invesco Advantage 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 Invesco Advantage MIT 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 Invesco Advantage i.e., Invesco Advantage and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between Invesco Advantage and Hargreaves Lansdown

Considering the 90-day investment horizon Invesco Advantage is expected to generate 8.17 times less return on investment than Hargreaves Lansdown. But when comparing it to its historical volatility, Invesco Advantage MIT is 2.18 times less risky than Hargreaves Lansdown. It trades about 0.01 of its potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,365  in Hargreaves Lansdown plc on October 24, 2024 and sell it today you would earn a total of  47.00  from holding Hargreaves Lansdown plc or generate 3.44% return on investment over 90 days.

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

Invesco Advantage MIT  vs.  Hargreaves Lansdown plc

Invesco Advantage MIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco Advantage MIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Invesco Advantage is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 Invesco Advantage and Hargreaves Lansdown

The main advantage of trading using opposite Invesco Advantage and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invesco Advantage 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 Invesco Advantage MIT 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.