Correlation Between Lemonade and Experian Plc
Can any of the company-specific risk be diversified away by investing in both Lemonade and Experian 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 Lemonade and Experian Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lemonade and Experian plc PK, you can compare the effects of market volatilities on Lemonade and Experian 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 Lemonade with a short position of Experian Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lemonade and Experian Plc.
Diversification Opportunities for Lemonade and Experian Plc
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lemonade and Experian is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lemonade and Experian plc PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Experian plc PK and Lemonade 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 Lemonade are associated (or correlated) with Experian Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Experian plc PK has no effect on the direction of Lemonade i.e., Lemonade and Experian Plc go up and down completely randomly.
Pair Corralation between Lemonade and Experian Plc
Given the investment horizon of 90 days Lemonade is expected to generate 3.53 times more return on investment than Experian Plc. However, Lemonade is 3.53 times more volatile than Experian plc PK. It trades about 0.08 of its potential returns per unit of risk. Experian plc PK is currently generating about 0.06 per unit of risk. If you would invest 1,808 in Lemonade on August 27, 2024 and sell it today you would earn a total of 3,120 from holding Lemonade or generate 172.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lemonade vs. Experian plc PK
Performance |
| Timeline |
| Lemonade |
| Experian plc PK |
Lemonade and Experian Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lemonade and Experian Plc
The main advantage of trading using opposite Lemonade and Experian Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lemonade position performs unexpectedly, Experian 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 Experian Plc will offset losses from the drop in Experian Plc's long position.| Lemonade vs. Fiverr International | Lemonade vs. Pinterest | Lemonade vs. Upstart Holdings | Lemonade vs. Fastly Inc |
| Experian Plc vs. Sack Lunch Productions | Experian Plc vs. Potash America | Experian Plc vs. Dalrada Financial Corp | Experian Plc vs. TransUnion |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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