Correlation Between Lendinvest PLC and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC and SMA Solar 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 Lendinvest PLC and SMA Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendinvest PLC and SMA Solar Technology, you can compare the effects of market volatilities on Lendinvest PLC and SMA Solar 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 Lendinvest PLC with a short position of SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and SMA Solar.
Diversification Opportunities for Lendinvest PLC and SMA Solar
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lendinvest and SMA is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology and Lendinvest PLC 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 Lendinvest PLC are associated (or correlated) with SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Lendinvest PLC i.e., Lendinvest PLC and SMA Solar go up and down completely randomly.
Pair Corralation between Lendinvest PLC and SMA Solar
Assuming the 90 days trading horizon Lendinvest PLC is expected to generate 0.55 times more return on investment than SMA Solar. However, Lendinvest PLC is 1.83 times less risky than SMA Solar. It trades about -0.11 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.09 per unit of risk. If you would invest 8,179 in Lendinvest PLC on November 27, 2024 and sell it today you would lose (5,429) from holding Lendinvest PLC or give up 66.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.26% |
| Values | Daily Returns |
Lendinvest PLC vs. SMA Solar Technology
Performance |
| Timeline |
| Lendinvest PLC |
| SMA Solar Technology |
Lendinvest PLC and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendinvest PLC and SMA Solar
The main advantage of trading using opposite Lendinvest PLC and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendinvest PLC position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Lendinvest PLC vs. Livermore Investments Group | Lendinvest PLC vs. Lloyds Banking Group | Lendinvest PLC vs. Liechtensteinische Landesbank AG | Lendinvest PLC vs. National Beverage Corp |
| SMA Solar vs. Gamma Communications PLC | SMA Solar vs. Ion Beam Applications | SMA Solar vs. Public Storage | SMA Solar vs. Verizon Communications |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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