Correlation Between Lindsell Train and Metro Bank
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and Metro Bank 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 Metro Bank 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 Metro Bank PLC, you can compare the effects of market volatilities on Lindsell Train and Metro Bank 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 Metro Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Metro Bank.
Diversification Opportunities for Lindsell Train and Metro Bank
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lindsell and Metro is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Metro Bank PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Bank 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 Metro Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Bank PLC has no effect on the direction of Lindsell Train i.e., Lindsell Train and Metro Bank go up and down completely randomly.
Pair Corralation between Lindsell Train and Metro Bank
Assuming the 90 days trading horizon Lindsell Train Investment is expected to under-perform the Metro Bank. But the stock apears to be less risky and, when comparing its historical volatility, Lindsell Train Investment is 2.34 times less risky than Metro Bank. The stock trades about -0.04 of its potential returns per unit of risk. The Metro Bank PLC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,100 in Metro Bank PLC on October 17, 2024 and sell it today you would earn a total of 300.00 from holding Metro Bank PLC or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lindsell Train Investment vs. Metro Bank PLC
Performance |
| Timeline |
| Lindsell Train Investment |
| Metro Bank PLC |
Lindsell Train and Metro Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Metro Bank
The main advantage of trading using opposite Lindsell Train and Metro Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, Metro Bank 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 Metro Bank will offset losses from the drop in Metro Bank's long position.| Lindsell Train vs. JB Hunt Transport | Lindsell Train vs. Evolution Gaming Group | Lindsell Train vs. Trainline Plc | Lindsell Train vs. Fresenius Medical Care |
| Metro Bank vs. Gamma Communications PLC | Metro Bank vs. BlackRock Frontiers Investment | Metro Bank vs. Bankers Investment Trust | Metro Bank vs. Lindsell Train Investment |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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