Correlation Between Lindsell Train and MG Plc
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and MG Plc 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 MG Plc 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 MG Plc, you can compare the effects of market volatilities on Lindsell Train and MG Plc 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 MG Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and MG Plc.
Diversification Opportunities for Lindsell Train and MG Plc
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lindsell and MNG is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and MG Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG 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 MG Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Plc has no effect on the direction of Lindsell Train i.e., Lindsell Train and MG Plc go up and down completely randomly.
Pair Corralation between Lindsell Train and MG Plc
Assuming the 90 days trading horizon Lindsell Train Investment is expected to under-perform the MG Plc. In addition to that, Lindsell Train is 1.84 times more volatile than MG Plc. It trades about -0.09 of its total potential returns per unit of risk. MG Plc is currently generating about 0.01 per unit of volatility. If you would invest 20,090 in MG Plc on August 28, 2024 and sell it today you would earn a total of 20.00 from holding MG Plc or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindsell Train Investment vs. MG Plc
Performance |
| Timeline |
| Lindsell Train Investment |
| MG Plc |
Lindsell Train and MG Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and MG Plc
The main advantage of trading using opposite Lindsell Train and MG Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, MG Plc 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 MG Plc will offset losses from the drop in MG Plc'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 |
| MG Plc vs. Silvercorp Metals | MG Plc vs. Ecclesiastical Insurance Office | MG Plc vs. Direct Line Insurance | MG Plc vs. AfriTin Mining |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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