Correlation Between CATLIN GROUP and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP 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 CATLIN GROUP and Lindsell Train into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Lindsell Train Investment, you can compare the effects of market volatilities on CATLIN GROUP 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 CATLIN GROUP with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Lindsell Train.
Diversification Opportunities for CATLIN GROUP and Lindsell Train
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CATLIN and Lindsell is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and Lindsell Train go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Lindsell Train
Assuming the 90 days trading horizon CATLIN GROUP is expected to under-perform the Lindsell Train. But the stock apears to be less risky and, when comparing its historical volatility, CATLIN GROUP is 1.33 times less risky than Lindsell Train. The stock trades about -0.25 of its potential returns per unit of risk. The Lindsell Train Investment is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 78,400 in Lindsell Train Investment on November 3, 2024 and sell it today you would earn a total of 5,800 from holding Lindsell Train Investment or generate 7.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
CATLIN GROUP vs. Lindsell Train Investment
Performance |
| Timeline |
| CATLIN GROUP |
| Lindsell Train Investment |
CATLIN GROUP and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Lindsell Train
The main advantage of trading using opposite CATLIN GROUP and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP 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.| CATLIN GROUP vs. Charter Communications Cl | CATLIN GROUP vs. Mobile Tornado Group | CATLIN GROUP vs. iShares Physical Silver | CATLIN GROUP vs. Zoom Video Communications |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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