Correlation Between Lindsell Train and Associated British
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Lindsell Train and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Associated British.
Diversification Opportunities for Lindsell Train and Associated British
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lindsell and Associated is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Lindsell Train i.e., Lindsell Train and Associated British go up and down completely randomly.
Pair Corralation between Lindsell Train and Associated British
Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 0.85 times more return on investment than Associated British. However, Lindsell Train Investment is 1.17 times less risky than Associated British. It trades about 0.05 of its potential returns per unit of risk. Associated British Foods is currently generating about -0.03 per unit of risk. If you would invest 85,400 in Lindsell Train Investment on November 29, 2024 and sell it today you would earn a total of 1,000.00 from holding Lindsell Train Investment or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindsell Train Investment vs. Associated British Foods
Performance |
| Timeline |
| Lindsell Train Investment |
| Associated British Foods |
Lindsell Train and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Associated British
The main advantage of trading using opposite Lindsell Train and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Lindsell Train vs. Resolute Mining Limited | Lindsell Train vs. Endeavour Mining Corp | Lindsell Train vs. Silvercorp Metals | Lindsell Train vs. Pan American Silver |
| Associated British vs. Playtech Plc | Associated British vs. Science in Sport | Associated British vs. Eastman Chemical Co | Associated British vs. Games Workshop Group |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |