Correlation Between Walmart and Hargreaves Lansdown

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

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

Diversification Opportunities for Walmart and Hargreaves Lansdown

-0.55

Correlation Coefficient

Walmart  Hargreaves Lansdown

Excellent diversification

The 3 months correlation between Walmart and Hargreaves is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Walmart 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 Walmart 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 Walmart 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 Walmart i.e., Walmart and Hargreaves Lansdown go up and down completely randomly.

Pair Corralation between Walmart and Hargreaves Lansdown

Considering the 90-day investment horizon Walmart is expected to generate 1.3 times less return on investment than Hargreaves Lansdown. But when comparing it to its historical volatility, Walmart is 4.21 times less risky than Hargreaves Lansdown. It trades about 0.14 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  942.00  in Hargreaves Lansdown plc on October 11, 2024 and sell it today you would earn a total of  470.00  from holding Hargreaves Lansdown plc or generate 49.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.45%
Values	Daily Returns

Walmart  vs.  Hargreaves Lansdown plc

Walmart

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Walmart are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Walmart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hargreaves Lansdown plc

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Hargreaves Lansdown plc has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Walmart and Hargreaves Lansdown

The main advantage of trading using opposite Walmart and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walmart 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 Walmart 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.