Correlation Between Heritage Global and Houlihan Lokey
Can any of the company-specific risk be diversified away by investing in both Heritage Global and Houlihan Lokey 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 Heritage Global and Houlihan Lokey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heritage Global and Houlihan Lokey, you can compare the effects of market volatilities on Heritage Global and Houlihan Lokey 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 Heritage Global with a short position of Houlihan Lokey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heritage Global and Houlihan Lokey.
Diversification Opportunities for Heritage Global and Houlihan Lokey
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heritage and Houlihan is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Heritage Global and Houlihan Lokey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Houlihan Lokey and Heritage Global 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 Heritage Global are associated (or correlated) with Houlihan Lokey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Houlihan Lokey has no effect on the direction of Heritage Global i.e., Heritage Global and Houlihan Lokey go up and down completely randomly.
Pair Corralation between Heritage Global and Houlihan Lokey
Given the investment horizon of 90 days Heritage Global is expected to under-perform the Houlihan Lokey. In addition to that, Heritage Global is 1.9 times more volatile than Houlihan Lokey. It trades about -0.06 of its total potential returns per unit of risk. Houlihan Lokey is currently generating about 0.17 per unit of volatility. If you would invest 13,427 in Houlihan Lokey on August 29, 2024 and sell it today you would earn a total of 5,316 from holding Houlihan Lokey or generate 39.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heritage Global vs. Houlihan Lokey
Performance |
| Timeline |
| Heritage Global |
| Houlihan Lokey |
Heritage Global and Houlihan Lokey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heritage Global and Houlihan Lokey
The main advantage of trading using opposite Heritage Global and Houlihan Lokey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heritage Global position performs unexpectedly, Houlihan Lokey 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 Houlihan Lokey will offset losses from the drop in Houlihan Lokey's long position.| Heritage Global vs. Scully Royalty | Heritage Global vs. Mercurity Fintech Holding | Heritage Global vs. Donnelley Financial Solutions | Heritage Global vs. Oppenheimer Holdings |
| Houlihan Lokey vs. Lazard | Houlihan Lokey vs. PJT Partners | Houlihan Lokey vs. Moelis Co | Houlihan Lokey vs. Piper Sandler Companies |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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