Correlation Between Bunzl PLC and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both Bunzl PLC and Lendinvest PLC 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 Bunzl PLC and Lendinvest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bunzl PLC and Lendinvest PLC, you can compare the effects of market volatilities on Bunzl PLC and Lendinvest PLC 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 Bunzl PLC with a short position of Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunzl PLC and Lendinvest PLC.
Diversification Opportunities for Bunzl PLC and Lendinvest PLC
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bunzl and Lendinvest is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bunzl PLC and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC and Bunzl PLC 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 Bunzl PLC are associated (or correlated) with Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Bunzl PLC i.e., Bunzl PLC and Lendinvest PLC go up and down completely randomly.
Pair Corralation between Bunzl PLC and Lendinvest PLC
Assuming the 90 days trading horizon Bunzl PLC is expected to generate 0.74 times more return on investment than Lendinvest PLC. However, Bunzl PLC is 1.36 times less risky than Lendinvest PLC. It trades about 0.17 of its potential returns per unit of risk. Lendinvest PLC is currently generating about 0.08 per unit of risk. If you would invest 342,795 in Bunzl PLC on August 30, 2024 and sell it today you would earn a total of 10,405 from holding Bunzl PLC or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bunzl PLC vs. Lendinvest PLC
Performance |
| Timeline |
| Bunzl PLC |
| Lendinvest PLC |
Bunzl PLC and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bunzl PLC and Lendinvest PLC
The main advantage of trading using opposite Bunzl PLC and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunzl PLC position performs unexpectedly, Lendinvest PLC 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.| Bunzl PLC vs. Lendinvest PLC | Bunzl PLC vs. Neometals | Bunzl PLC vs. Albion Technology General | Bunzl PLC vs. Jupiter Fund Management |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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