Correlation Between Auto Trader and Hargreaves Lansdown
Can any of the company-specific risk be diversified away by investing in both Auto Trader 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 Auto Trader and Hargreaves Lansdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Hargreaves Lansdown plc, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Hargreaves Lansdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Hargreaves Lansdown.
Diversification Opportunities for Auto Trader and Hargreaves Lansdown
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Auto and Hargreaves is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group 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 Auto Trader 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 Auto Trader Group 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 Auto Trader i.e., Auto Trader and Hargreaves Lansdown go up and down completely randomly.
Pair Corralation between Auto Trader and Hargreaves Lansdown
Assuming the 90 days trading horizon Auto Trader Group is expected to under-perform the Hargreaves Lansdown. In addition to that, Auto Trader is 15.34 times more volatile than Hargreaves Lansdown plc. It trades about -0.16 of its total potential returns per unit of risk. Hargreaves Lansdown plc is currently generating about 0.04 per unit of volatility. If you would invest 108,700 in Hargreaves Lansdown plc on August 28, 2024 and sell it today you would earn a total of 100.00 from holding Hargreaves Lansdown plc or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Hargreaves Lansdown plc
Performance |
| Timeline |
| Auto Trader Group |
| Hargreaves Lansdown plc |
Auto Trader and Hargreaves Lansdown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Hargreaves Lansdown
The main advantage of trading using opposite Auto Trader and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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.| Auto Trader vs. Ondine Biomedical | Auto Trader vs. Europa Metals | Auto Trader vs. Revolution Beauty Group | Auto Trader vs. Biome Technologies Plc |
| Hargreaves Lansdown vs. Catalyst Media Group | Hargreaves Lansdown vs. Oncimmune Holdings plc | Hargreaves Lansdown vs. Invesco Health Care | Hargreaves Lansdown vs. Coor Service Management |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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