Correlation Between Ross Stores and Hargreaves Lansdown
Can any of the company-specific risk be diversified away by investing in both Ross Stores 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 Ross Stores and Hargreaves Lansdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and Hargreaves Lansdown plc, you can compare the effects of market volatilities on Ross Stores 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 Ross Stores with a short position of Hargreaves Lansdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and Hargreaves Lansdown.
Diversification Opportunities for Ross Stores and Hargreaves Lansdown
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and Hargreaves is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores 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 Ross Stores 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 Ross Stores 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 Ross Stores i.e., Ross Stores and Hargreaves Lansdown go up and down completely randomly.
Pair Corralation between Ross Stores and Hargreaves Lansdown
Assuming the 90 days trading horizon Ross Stores is expected to generate 2.29 times less return on investment than Hargreaves Lansdown. But when comparing it to its historical volatility, Ross Stores is 1.3 times less risky than Hargreaves Lansdown. It trades about 0.06 of its potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 71,549 in Hargreaves Lansdown plc on September 3, 2024 and sell it today you would earn a total of 37,701 from holding Hargreaves Lansdown plc or generate 52.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Ross Stores vs. Hargreaves Lansdown plc
Performance |
| Timeline |
| Ross Stores |
| Hargreaves Lansdown plc |
Ross Stores and Hargreaves Lansdown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and Hargreaves Lansdown
The main advantage of trading using opposite Ross Stores and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores 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.| Ross Stores vs. Federal Realty Investment | Ross Stores vs. Herald Investment Trust | Ross Stores vs. Taylor Maritime Investments | Ross Stores vs. British American Tobacco |
| Hargreaves Lansdown vs. Auction Technology Group | Hargreaves Lansdown vs. JB Hunt Transport | Hargreaves Lansdown vs. Alfa Financial Software | Hargreaves Lansdown vs. Broadridge Financial Solutions |
Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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