Correlation Between Lindsell Train and Catalyst Media
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and Catalyst Media 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 Catalyst Media 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 Catalyst Media Group, you can compare the effects of market volatilities on Lindsell Train and Catalyst Media 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 Catalyst Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Catalyst Media.
Diversification Opportunities for Lindsell Train and Catalyst Media
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lindsell and Catalyst is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Lindsell Train i.e., Lindsell Train and Catalyst Media go up and down completely randomly.
Pair Corralation between Lindsell Train and Catalyst Media
Assuming the 90 days trading horizon Lindsell Train Investment is expected to under-perform the Catalyst Media. But the stock apears to be less risky and, when comparing its historical volatility, Lindsell Train Investment is 1.15 times less risky than Catalyst Media. The stock trades about -0.06 of its potential returns per unit of risk. The Catalyst Media Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 11,600 in Catalyst Media Group on August 29, 2024 and sell it today you would lose (2,600) from holding Catalyst Media Group or give up 22.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindsell Train Investment vs. Catalyst Media Group
Performance |
| Timeline |
| Lindsell Train Investment |
| Catalyst Media Group |
Lindsell Train and Catalyst Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Catalyst Media
The main advantage of trading using opposite Lindsell Train and Catalyst Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, Catalyst Media 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 Catalyst Media will offset losses from the drop in Catalyst Media's long position.| Lindsell Train vs. Catalyst Media Group | Lindsell Train vs. Oncimmune Holdings plc | Lindsell Train vs. Invesco Health Care | Lindsell Train vs. Coor Service Management |
| Catalyst Media vs. Universal Music Group | Catalyst Media vs. Ecclesiastical Insurance Office | Catalyst Media vs. X FAB Silicon Foundries | Catalyst Media vs. Polar Capital Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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