Correlation Between Bloomsbury Publishing and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Bloomsbury Publishing 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 Bloomsbury Publishing and Lindsell Train into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bloomsbury Publishing Plc and Lindsell Train Investment, you can compare the effects of market volatilities on Bloomsbury Publishing 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 Bloomsbury Publishing with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bloomsbury Publishing and Lindsell Train.
Diversification Opportunities for Bloomsbury Publishing and Lindsell Train
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bloomsbury and Lindsell is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing 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 Bloomsbury Publishing 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 Bloomsbury Publishing 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 Bloomsbury Publishing i.e., Bloomsbury Publishing and Lindsell Train go up and down completely randomly.
Pair Corralation between Bloomsbury Publishing and Lindsell Train
Assuming the 90 days trading horizon Bloomsbury Publishing Plc is expected to generate 1.44 times more return on investment than Lindsell Train. However, Bloomsbury Publishing is 1.44 times more volatile than Lindsell Train Investment. It trades about 0.08 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about 0.0 per unit of risk. If you would invest 46,491 in Bloomsbury Publishing Plc on November 3, 2024 and sell it today you would earn a total of 20,109 from holding Bloomsbury Publishing Plc or generate 43.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bloomsbury Publishing Plc vs. Lindsell Train Investment
Performance |
| Timeline |
| Bloomsbury Publishing Plc |
| Lindsell Train Investment |
Bloomsbury Publishing and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bloomsbury Publishing and Lindsell Train
The main advantage of trading using opposite Bloomsbury Publishing and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing 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.| Bloomsbury Publishing vs. Sligro Food Group | Bloomsbury Publishing vs. Associated British Foods | Bloomsbury Publishing vs. Tyson Foods Cl | Bloomsbury Publishing vs. FC Investment Trust |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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