Correlation Between Edita Food and Lindsell Train
Can any of the company-specific risk be diversified away by investing in both Edita Food 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 Edita Food and Lindsell Train into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edita Food Industries and Lindsell Train Investment, you can compare the effects of market volatilities on Edita Food 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 Edita Food with a short position of Lindsell Train. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edita Food and Lindsell Train.
Diversification Opportunities for Edita Food and Lindsell Train
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Edita and Lindsell is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Edita Food Industries 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 Edita Food 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 Edita Food Industries 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 Edita Food i.e., Edita Food and Lindsell Train go up and down completely randomly.
Pair Corralation between Edita Food and Lindsell Train
Assuming the 90 days trading horizon Edita Food Industries is expected to under-perform the Lindsell Train. In addition to that, Edita Food is 1.22 times more volatile than Lindsell Train Investment. It trades about -0.21 of its total potential returns per unit of risk. Lindsell Train Investment is currently generating about 0.05 per unit of volatility. If you would invest 85,400 in Lindsell Train Investment on November 29, 2024 and sell it today you would earn a total of 1,000.00 from holding Lindsell Train Investment or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edita Food Industries vs. Lindsell Train Investment
Performance |
| Timeline |
| Edita Food Industries |
| Lindsell Train Investment |
Edita Food and Lindsell Train Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edita Food and Lindsell Train
The main advantage of trading using opposite Edita Food and Lindsell Train positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edita Food 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.| Edita Food vs. Wizz Air Holdings | Edita Food vs. Ecclesiastical Insurance Office | Edita Food vs. JD Sports Fashion | Edita Food vs. UNIQA Insurance Group |
| Lindsell Train vs. Resolute Mining Limited | Lindsell Train vs. Endeavour Mining Corp | Lindsell Train vs. Silvercorp Metals | Lindsell Train vs. Pan American Silver |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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