Correlation Between Raymond James and Heritage Global

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

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

Diversification Opportunities for Raymond James and Heritage Global

0.32

Correlation Coefficient

Raymond James  Heritage Global

Weak diversification

The 3 months correlation between Raymond and Heritage is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Raymond James Financial and Heritage Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Global and Raymond James 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 Raymond James Financial 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 Raymond James i.e., Raymond James and Heritage Global go up and down completely randomly.

Pair Corralation between Raymond James and Heritage Global

Assuming the 90 days trading horizon Raymond James is expected to generate 5.84 times less return on investment than Heritage Global. But when comparing it to its historical volatility, Raymond James Financial is 18.39 times less risky than Heritage Global. It trades about 0.17 of its potential returns per unit of risk. Heritage Global is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Heritage Global on September 12, 2024 and sell it today you would earn a total of  10.00  from holding Heritage Global or generate 6.13% return on investment over 90 days.

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

Raymond James Financial  vs.  Heritage Global

Raymond James Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Raymond James Financial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Raymond James is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 Raymond James and Heritage Global

The main advantage of trading using opposite Raymond James and Heritage Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raymond James 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 Raymond James Financial 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.