Correlation Between AJ Bell and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both AJ Bell and Lindsell Train 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 AJ Bell and Lindsell Train into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AJ Bell plc and Lindsell Train Investment, you can compare the effects of market volatilities on AJ Bell and Lindsell Train 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 AJ Bell with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of AJ Bell and Lindsell Train.
Diversification Opportunities for AJ Bell and Lindsell Train
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AJB and Lindsell is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding AJ Bell plc and Lindsell Train Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindsell Train Investment and AJ Bell 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 AJ Bell plc are associated (or correlated) with Lindsell Train. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindsell Train Investment has no effect on the direction of AJ Bell i.e., AJ Bell and Lindsell Train go up and down completely randomly.
Pair Corralation between AJ Bell and Lindsell Train
Assuming the 90 days trading horizon AJ Bell plc is expected to generate 0.9 times more return on investment than Lindsell Train. However, AJ Bell plc is 1.11 times less risky than Lindsell Train. It trades about 0.11 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about -0.11 per unit of risk. If you would invest 42,850 in AJ Bell plc on August 31, 2024 and sell it today you would earn a total of 4,450 from holding AJ Bell plc or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AJ Bell plc vs. Lindsell Train Investment
Performance |
| Timeline |
| AJ Bell plc |
| Lindsell Train Investment |
AJ Bell and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AJ Bell and Lindsell Train
The main advantage of trading using opposite AJ Bell and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ Bell position performs unexpectedly, Lindsell Train 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 Lindsell Train will offset losses from the drop in Lindsell Train's long position.| AJ Bell vs. Premier Foods PLC | AJ Bell vs. Sligro Food Group | AJ Bell vs. Pfeiffer Vacuum Technology | AJ Bell vs. Spotify Technology SA |
| Lindsell Train vs. Ecofin Global Utilities | Lindsell Train vs. AMG Advanced Metallurgical | Lindsell Train vs. Wheaton Precious Metals | Lindsell Train vs. Sligro Food Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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