Correlation Between Lindsell Train and LBG Media
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and LBG 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 LBG 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 LBG Media PLC, you can compare the effects of market volatilities on Lindsell Train and LBG 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and LBG Media.
Diversification Opportunities for Lindsell Train and LBG Media
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lindsell and LBG is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Lindsell Train i.e., Lindsell Train and LBG Media go up and down completely randomly.
Pair Corralation between Lindsell Train and LBG Media
Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 0.63 times more return on investment than LBG Media. However, Lindsell Train Investment is 1.59 times less risky than LBG Media. It trades about 0.2 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.07 per unit of risk. If you would invest 81,000 in Lindsell Train Investment on November 7, 2024 and sell it today you would earn a total of 3,200 from holding Lindsell Train Investment or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindsell Train Investment vs. LBG Media PLC
Performance |
| Timeline |
| Lindsell Train Investment |
| LBG Media PLC |
Lindsell Train and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and LBG Media
The main advantage of trading using opposite Lindsell Train and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, LBG 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 LBG Media will offset losses from the drop in LBG Media's long position.| Lindsell Train vs. Wyndham Hotels Resorts | Lindsell Train vs. Bell Food Group | Lindsell Train vs. JPMorgan Japanese Investment | Lindsell Train vs. Austevoll Seafood ASA |
| LBG Media vs. Public Storage | LBG Media vs. Wyndham Hotels Resorts | LBG Media vs. Wizz Air Holdings | LBG Media vs. Delta Air Lines |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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