Correlation Between Herald Investment and LBG Media
Can any of the company-specific risk be diversified away by investing in both Herald Investment and LBG Media 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 Herald Investment and LBG Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and LBG Media PLC, you can compare the effects of market volatilities on Herald Investment and LBG Media 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 Herald Investment with a short position of LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and LBG Media.
Diversification Opportunities for Herald Investment and LBG Media
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Herald and LBG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC and Herald Investment 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 Herald Investment Trust are associated (or correlated) with LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Herald Investment i.e., Herald Investment and LBG Media go up and down completely randomly.
Pair Corralation between Herald Investment and LBG Media
Assuming the 90 days trading horizon Herald Investment Trust is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, Herald Investment Trust is 1.36 times less risky than LBG Media. The stock trades about -0.13 of its potential returns per unit of risk. The LBG Media PLC is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 13,000 in LBG Media PLC on October 30, 2024 and sell it today you would lose (350.00) from holding LBG Media PLC or give up 2.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. LBG Media PLC
Performance |
| Timeline |
| Herald Investment Trust |
| LBG Media PLC |
Herald Investment and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and LBG Media
The main advantage of trading using opposite Herald Investment and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.| Herald Investment vs. One Media iP | Herald Investment vs. Check Point Software | Herald Investment vs. SBM Offshore NV | Herald Investment vs. BW Offshore |
| LBG Media vs. Lindsell Train Investment | LBG Media vs. Planet Fitness Cl | LBG Media vs. Abingdon Health Plc | LBG Media vs. Ecclesiastical Insurance Office |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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