Correlation Between Houlihan Lokey and Jefferies Financial
Can any of the company-specific risk be diversified away by investing in both Houlihan Lokey and Jefferies Financial 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 Houlihan Lokey and Jefferies Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Houlihan Lokey and Jefferies Financial Group, you can compare the effects of market volatilities on Houlihan Lokey and Jefferies Financial 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 Houlihan Lokey with a short position of Jefferies Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Houlihan Lokey and Jefferies Financial.
Diversification Opportunities for Houlihan Lokey and Jefferies Financial
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Houlihan and Jefferies is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Houlihan Lokey and Jefferies Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jefferies Financial and Houlihan Lokey 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 Houlihan Lokey are associated (or correlated) with Jefferies Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jefferies Financial has no effect on the direction of Houlihan Lokey i.e., Houlihan Lokey and Jefferies Financial go up and down completely randomly.
Pair Corralation between Houlihan Lokey and Jefferies Financial
Considering the 90-day investment horizon Houlihan Lokey is expected to generate 1.6 times less return on investment than Jefferies Financial. But when comparing it to its historical volatility, Houlihan Lokey is 1.01 times less risky than Jefferies Financial. It trades about 0.22 of its potential returns per unit of risk. Jefferies Financial Group is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 6,464 in Jefferies Financial Group on August 30, 2024 and sell it today you would earn a total of 1,429 from holding Jefferies Financial Group or generate 22.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Houlihan Lokey vs. Jefferies Financial Group
Performance |
| Timeline |
| Houlihan Lokey |
| Jefferies Financial |
Houlihan Lokey and Jefferies Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Houlihan Lokey and Jefferies Financial
The main advantage of trading using opposite Houlihan Lokey and Jefferies Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Houlihan Lokey position performs unexpectedly, Jefferies Financial 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 Jefferies Financial will offset losses from the drop in Jefferies Financial's long position.| Houlihan Lokey vs. Lazard | Houlihan Lokey vs. PJT Partners | Houlihan Lokey vs. Moelis Co | Houlihan Lokey vs. Piper Sandler Companies |
| Jefferies Financial vs. Lazard | Jefferies Financial vs. PJT Partners | Jefferies Financial vs. Moelis Co | Jefferies Financial vs. Houlihan Lokey |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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