Correlation Between Lindsell Train and X FAB
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and X FAB 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 Lindsell Train and X FAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lindsell Train Investment and X FAB Silicon Foundries, you can compare the effects of market volatilities on Lindsell Train and X FAB 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 Lindsell Train with a short position of X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and X FAB.
Diversification Opportunities for Lindsell Train and X FAB
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lindsell and 0ROZ is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon and Lindsell Train 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 Lindsell Train Investment are associated (or correlated) with X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Lindsell Train i.e., Lindsell Train and X FAB go up and down completely randomly.
Pair Corralation between Lindsell Train and X FAB
Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 0.61 times more return on investment than X FAB. However, Lindsell Train Investment is 1.65 times less risky than X FAB. It trades about -0.06 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.11 per unit of risk. If you would invest 82,795 in Lindsell Train Investment on September 1, 2024 and sell it today you would lose (10,595) from holding Lindsell Train Investment or give up 12.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Lindsell Train Investment vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Lindsell Train Investment |
| X FAB Silicon |
Lindsell Train and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and X FAB
The main advantage of trading using opposite Lindsell Train and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Lindsell Train vs. Toyota Motor Corp | Lindsell Train vs. SoftBank Group Corp | Lindsell Train vs. OTP Bank Nyrt | Lindsell Train vs. Las Vegas Sands |
| X FAB vs. Gamma Communications PLC | X FAB vs. Dalata Hotel Group | X FAB vs. Zegona Communications Plc | X FAB vs. Gaztransport et Technigaz |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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