Correlation Between Fevertree Drinks and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Lendinvest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Lendinvest PLC, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Lendinvest PLC.
Diversification Opportunities for Fevertree Drinks and Lendinvest PLC
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fevertree and Lendinvest is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks Plc and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks i.e., Fevertree Drinks and Lendinvest PLC go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Lendinvest PLC
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to generate 1.38 times more return on investment than Lendinvest PLC. However, Fevertree Drinks is 1.38 times more volatile than Lendinvest PLC. It trades about 0.06 of its potential returns per unit of risk. Lendinvest PLC is currently generating about -0.18 per unit of risk. If you would invest 70,600 in Fevertree Drinks Plc on September 13, 2024 and sell it today you would earn a total of 1,100 from holding Fevertree Drinks Plc or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Lendinvest PLC
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Lendinvest PLC |
Fevertree Drinks and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Lendinvest PLC
The main advantage of trading using opposite Fevertree Drinks and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Roper Technologies | Fevertree Drinks vs. Sunny Optical Technology | Fevertree Drinks vs. Accsys Technologies PLC | Fevertree Drinks vs. Metals Exploration Plc |
| Lendinvest PLC vs. Check Point Software | Lendinvest PLC vs. Creo Medical Group | Lendinvest PLC vs. Polar Capital Technology | Lendinvest PLC vs. SMA Solar Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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