Correlation Between Lindsell Train and Edinburgh Investment
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and Edinburgh Investment 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 Edinburgh Investment 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 Edinburgh Investment Trust, you can compare the effects of market volatilities on Lindsell Train and Edinburgh Investment 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 Edinburgh Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Edinburgh Investment.
Diversification Opportunities for Lindsell Train and Edinburgh Investment
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lindsell and Edinburgh is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Edinburgh Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edinburgh Investment 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 Edinburgh Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edinburgh Investment has no effect on the direction of Lindsell Train i.e., Lindsell Train and Edinburgh Investment go up and down completely randomly.
Pair Corralation between Lindsell Train and Edinburgh Investment
Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 1.33 times more return on investment than Edinburgh Investment. However, Lindsell Train is 1.33 times more volatile than Edinburgh Investment Trust. It trades about 0.28 of its potential returns per unit of risk. Edinburgh Investment Trust is currently generating about 0.16 per unit of risk. If you would invest 79,100 in Lindsell Train Investment on November 4, 2024 and sell it today you would earn a total of 5,100 from holding Lindsell Train Investment or generate 6.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lindsell Train Investment vs. Edinburgh Investment Trust
Performance |
| Timeline |
| Lindsell Train Investment |
| Edinburgh Investment |
Lindsell Train and Edinburgh Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Edinburgh Investment
The main advantage of trading using opposite Lindsell Train and Edinburgh Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, Edinburgh Investment 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 Edinburgh Investment will offset losses from the drop in Edinburgh Investment's long position.| Lindsell Train vs. AcadeMedia AB | Lindsell Train vs. Centaur Media | Lindsell Train vs. Host Hotels Resorts | Lindsell Train vs. PPHE Hotel Group |
| Edinburgh Investment vs. Bank of Ireland | Edinburgh Investment vs. MT Bank Corp | Edinburgh Investment vs. Berner Kantonalbank AG | Edinburgh Investment vs. Creo Medical 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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