Correlation Between Robinhood Markets and Heritage Global

Can any of the company-specific risk be diversified away by investing in both Robinhood Markets and Heritage Global 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 Robinhood Markets and Heritage Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Robinhood Markets and Heritage Global, you can compare the effects of market volatilities on Robinhood Markets and Heritage Global 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 Robinhood Markets with a short position of Heritage Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robinhood Markets and Heritage Global.

Diversification Opportunities for Robinhood Markets and Heritage Global

0.29

Correlation Coefficient

Robinhood Markets  Heritage Global

Modest diversification

The 3 months correlation between Robinhood and Heritage is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Robinhood Markets and Heritage Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Global and Robinhood Markets 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 Robinhood Markets are associated (or correlated) with Heritage Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Global has no effect on the direction of Robinhood Markets i.e., Robinhood Markets and Heritage Global go up and down completely randomly.

Pair Corralation between Robinhood Markets and Heritage Global

Given the investment horizon of 90 days Robinhood Markets is expected to generate 2.03 times more return on investment than Heritage Global. However, Robinhood Markets is 2.03 times more volatile than Heritage Global. It trades about 0.22 of its potential returns per unit of risk. Heritage Global is currently generating about 0.05 per unit of risk. If you would invest  2,164  in Robinhood Markets on September 12, 2024 and sell it today you would earn a total of  1,572  from holding Robinhood Markets or generate 72.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Robinhood Markets  vs.  Heritage Global

Robinhood Markets

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Robinhood Markets are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Robinhood Markets exhibited solid returns over the last few months and may actually be approaching a breakup point.

Heritage Global

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Heritage Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Robinhood Markets and Heritage Global

The main advantage of trading using opposite Robinhood Markets and Heritage Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Robinhood Markets position performs unexpectedly, Heritage Global 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 Heritage Global will offset losses from the drop in Heritage Global's long position.

The idea behind Robinhood Markets and Heritage Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.