Correlation Between Lendinvest PLC and TMT Investments
Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC and TMT Investments 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 TMT Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendinvest PLC and TMT Investments PLC, you can compare the effects of market volatilities on Lendinvest PLC and TMT Investments 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 TMT Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and TMT Investments.
Diversification Opportunities for Lendinvest PLC and TMT Investments
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lendinvest and TMT is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC and TMT Investments PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMT Investments 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 TMT Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMT Investments PLC has no effect on the direction of Lendinvest PLC i.e., Lendinvest PLC and TMT Investments go up and down completely randomly.
Pair Corralation between Lendinvest PLC and TMT Investments
Assuming the 90 days trading horizon Lendinvest PLC is expected to generate 1.07 times less return on investment than TMT Investments. But when comparing it to its historical volatility, Lendinvest PLC is 2.1 times less risky than TMT Investments. It trades about 0.08 of its potential returns per unit of risk. TMT Investments PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 301.00 in TMT Investments PLC on August 29, 2024 and sell it today you would earn a total of 5.00 from holding TMT Investments PLC or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lendinvest PLC vs. TMT Investments PLC
Performance |
| Timeline |
| Lendinvest PLC |
| TMT Investments PLC |
Lendinvest PLC and TMT Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendinvest PLC and TMT Investments
The main advantage of trading using opposite Lendinvest PLC and TMT Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendinvest PLC position performs unexpectedly, TMT Investments 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 TMT Investments will offset losses from the drop in TMT Investments' long position.| Lendinvest PLC vs. Toyota Motor Corp | Lendinvest PLC vs. Neometals | Lendinvest PLC vs. Coor Service Management | Lendinvest PLC vs. Albion Technology General |
| TMT Investments vs. Toyota Motor Corp | TMT Investments vs. Lendinvest PLC | TMT Investments vs. Neometals | TMT Investments vs. Coor Service Management |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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