Correlation Between Cairn Homes and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Cairn Homes 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 Cairn Homes and Lindsell Train into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Lindsell Train Investment, you can compare the effects of market volatilities on Cairn Homes 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 Cairn Homes with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Lindsell Train.
Diversification Opportunities for Cairn Homes and Lindsell Train
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cairn and Lindsell is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes 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 Cairn Homes 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 Cairn Homes 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 Cairn Homes i.e., Cairn Homes and Lindsell Train go up and down completely randomly.
Pair Corralation between Cairn Homes and Lindsell Train
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.1 times more return on investment than Lindsell Train. However, Cairn Homes is 1.1 times more volatile than Lindsell Train Investment. It trades about 0.11 of its potential returns per unit of risk. Lindsell Train Investment is currently generating about 0.02 per unit of risk. If you would invest 13,267 in Cairn Homes PLC on November 7, 2024 and sell it today you would earn a total of 5,613 from holding Cairn Homes PLC or generate 42.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Lindsell Train Investment
Performance |
| Timeline |
| Cairn Homes PLC |
| Lindsell Train Investment |
Cairn Homes and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Lindsell Train
The main advantage of trading using opposite Cairn Homes and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes 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.| Cairn Homes vs. Universal Health Services | Cairn Homes vs. Naturhouse Health SA | Cairn Homes vs. EJF Investments | Cairn Homes vs. Cardinal Health |
| Lindsell Train vs. Induction Healthcare Group | Lindsell Train vs. CNH Industrial NV | Lindsell Train vs. Waste Management | Lindsell Train vs. Primary Health Properties |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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