Correlation Between CleanTech Lithium and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium 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 CleanTech Lithium and Lindsell Train into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Lindsell Train Investment, you can compare the effects of market volatilities on CleanTech Lithium 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 CleanTech Lithium with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Lindsell Train.
Diversification Opportunities for CleanTech Lithium and Lindsell Train
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CleanTech and Lindsell is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium 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 CleanTech Lithium 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 CleanTech Lithium 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 CleanTech Lithium i.e., CleanTech Lithium and Lindsell Train go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Lindsell Train
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Lindsell Train. In addition to that, CleanTech Lithium is 3.35 times more volatile than Lindsell Train Investment. It trades about -0.09 of its total potential returns per unit of risk. Lindsell Train Investment is currently generating about -0.06 per unit of volatility. If you would invest 82,795 in Lindsell Train Investment on September 1, 2024 and sell it today you would lose (10,595) from holding Lindsell Train Investment or give up 12.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Lindsell Train Investment
Performance |
| Timeline |
| CleanTech Lithium plc |
| Lindsell Train Investment |
CleanTech Lithium and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Lindsell Train
The main advantage of trading using opposite CleanTech Lithium and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium 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.| CleanTech Lithium vs. Hansa Investment | CleanTech Lithium vs. New Residential Investment | CleanTech Lithium vs. Odyssean Investment Trust | CleanTech Lithium vs. Livermore Investments Group |
| Lindsell Train vs. Toyota Motor Corp | Lindsell Train vs. SoftBank Group Corp | Lindsell Train vs. OTP Bank Nyrt | Lindsell Train vs. Las Vegas Sands |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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