Correlation Between SANTANDER and Hargreaves Lansdown
Can any of the company-specific risk be diversified away by investing in both SANTANDER 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 SANTANDER and Hargreaves Lansdown into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANTANDER UK 8 and Hargreaves Lansdown plc, you can compare the effects of market volatilities on SANTANDER 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 SANTANDER with a short position of Hargreaves Lansdown. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANTANDER and Hargreaves Lansdown.
Diversification Opportunities for SANTANDER and Hargreaves Lansdown
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SANTANDER and Hargreaves is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SANTANDER UK 8 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 SANTANDER 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 SANTANDER UK 8 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 SANTANDER i.e., SANTANDER and Hargreaves Lansdown go up and down completely randomly.
Pair Corralation between SANTANDER and Hargreaves Lansdown
Assuming the 90 days trading horizon SANTANDER is expected to generate 1.51 times less return on investment than Hargreaves Lansdown. But when comparing it to its historical volatility, SANTANDER UK 8 is 2.34 times less risky than Hargreaves Lansdown. It trades about 0.07 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 79,706 in Hargreaves Lansdown plc on September 5, 2024 and sell it today you would earn a total of 29,544 from holding Hargreaves Lansdown plc or generate 37.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANTANDER UK 8 vs. Hargreaves Lansdown plc
Performance |
| Timeline |
| SANTANDER UK 8 |
| Hargreaves Lansdown plc |
SANTANDER and Hargreaves Lansdown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANTANDER and Hargreaves Lansdown
The main advantage of trading using opposite SANTANDER and Hargreaves Lansdown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANTANDER 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.| SANTANDER vs. SupplyMe Capital PLC | SANTANDER vs. SM Energy Co | SANTANDER vs. FuelCell Energy | SANTANDER vs. Grand Vision Media |
| Hargreaves Lansdown vs. SupplyMe Capital PLC | Hargreaves Lansdown vs. Lloyds Banking Group | Hargreaves Lansdown vs. Premier African Minerals | Hargreaves Lansdown vs. SANTANDER UK 8 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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