Correlation Between Lendinvest PLC and Tesco PLC
Can any of the company-specific risk be diversified away by investing in both Lendinvest PLC and Tesco 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 Tesco 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 Tesco PLC, you can compare the effects of market volatilities on Lendinvest PLC and Tesco 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 Tesco PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendinvest PLC and Tesco PLC.
Diversification Opportunities for Lendinvest PLC and Tesco PLC
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lendinvest and Tesco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lendinvest PLC and Tesco PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesco 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 Tesco PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesco PLC has no effect on the direction of Lendinvest PLC i.e., Lendinvest PLC and Tesco PLC go up and down completely randomly.
Pair Corralation between Lendinvest PLC and Tesco PLC
Assuming the 90 days trading horizon Lendinvest PLC is expected to under-perform the Tesco PLC. In addition to that, Lendinvest PLC is 1.52 times more volatile than Tesco PLC. It trades about -0.02 of its total potential returns per unit of risk. Tesco PLC is currently generating about 0.11 per unit of volatility. If you would invest 27,699 in Tesco PLC on September 3, 2024 and sell it today you would earn a total of 8,941 from holding Tesco PLC or generate 32.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendinvest PLC vs. Tesco PLC
Performance |
| Timeline |
| Lendinvest PLC |
| Tesco PLC |
Lendinvest PLC and Tesco PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendinvest PLC and Tesco PLC
The main advantage of trading using opposite Lendinvest PLC and Tesco PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendinvest PLC position performs unexpectedly, Tesco 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 Tesco PLC will offset losses from the drop in Tesco PLC's long position.| Lendinvest PLC vs. SupplyMe Capital PLC | Lendinvest PLC vs. 88 Energy | Lendinvest PLC vs. Vodafone Group PLC | Lendinvest PLC vs. Vodafone Group PLC |
| Tesco PLC vs. UNIQA Insurance Group | Tesco PLC vs. Veolia Environnement VE | Tesco PLC vs. National Bank of | Tesco PLC vs. Lendinvest PLC |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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