Correlation Between Lendinvest PLC and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC and GlobalData 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 Lendinvest PLC and GlobalData PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendinvest PLC and GlobalData PLC, you can compare the effects of market volatilities on Lendinvest PLC and GlobalData 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 Lendinvest PLC with a short position of GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and GlobalData PLC.
Diversification Opportunities for Lendinvest PLC and GlobalData PLC
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lendinvest and GlobalData is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Lendinvest PLC i.e., Lendinvest PLC and GlobalData PLC go up and down completely randomly.
Pair Corralation between Lendinvest PLC and GlobalData PLC
Assuming the 90 days trading horizon Lendinvest PLC is expected to under-perform the GlobalData PLC. But the stock apears to be less risky and, when comparing its historical volatility, Lendinvest PLC is 1.35 times less risky than GlobalData PLC. The stock trades about 0.0 of its potential returns per unit of risk. The GlobalData PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 16,688 in GlobalData PLC on September 1, 2024 and sell it today you would earn a total of 3,512 from holding GlobalData PLC or generate 21.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendinvest PLC vs. GlobalData PLC
Performance |
| Timeline |
| Lendinvest PLC |
| GlobalData PLC |
Lendinvest PLC and GlobalData PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendinvest PLC and GlobalData PLC
The main advantage of trading using opposite Lendinvest PLC and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendinvest PLC position performs unexpectedly, GlobalData 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 GlobalData PLC will offset losses from the drop in GlobalData PLC's long position.| Lendinvest PLC vs. Samsung Electronics Co | Lendinvest PLC vs. Samsung Electronics Co | Lendinvest PLC vs. Toyota Motor Corp | Lendinvest PLC vs. Reliance Industries Ltd |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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