Correlation Between Lindsell Train and CleanTech Lithium
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and CleanTech Lithium 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 CleanTech Lithium 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 CleanTech Lithium plc, you can compare the effects of market volatilities on Lindsell Train and CleanTech Lithium 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 CleanTech Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and CleanTech Lithium.
Diversification Opportunities for Lindsell Train and CleanTech Lithium
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lindsell and CleanTech is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and CleanTech Lithium plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanTech Lithium plc 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 CleanTech Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanTech Lithium plc has no effect on the direction of Lindsell Train i.e., Lindsell Train and CleanTech Lithium go up and down completely randomly.
Pair Corralation between Lindsell Train and CleanTech Lithium
Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 0.3 times more return on investment than CleanTech Lithium. However, Lindsell Train Investment is 3.35 times less risky than CleanTech Lithium. It trades about -0.06 of its potential returns per unit of risk. CleanTech Lithium plc is currently generating about -0.09 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindsell Train Investment vs. CleanTech Lithium plc
Performance |
| Timeline |
| Lindsell Train Investment |
| CleanTech Lithium plc |
Lindsell Train and CleanTech Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and CleanTech Lithium
The main advantage of trading using opposite Lindsell Train and CleanTech Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, CleanTech Lithium 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 CleanTech Lithium will offset losses from the drop in CleanTech Lithium'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 |
| CleanTech Lithium vs. Hansa Investment | CleanTech Lithium vs. New Residential Investment | CleanTech Lithium vs. Odyssean Investment Trust | CleanTech Lithium vs. Livermore Investments 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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