Correlation Between Lindsell Train and Smithson Investment
Can any of the company-specific risk be diversified away by investing in both Lindsell Train and Smithson 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 Smithson 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 Smithson Investment Trust, you can compare the effects of market volatilities on Lindsell Train and Smithson 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 Smithson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Smithson Investment.
Diversification Opportunities for Lindsell Train and Smithson Investment
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lindsell and Smithson is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Smithson Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smithson Investment Trust 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 Smithson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smithson Investment Trust has no effect on the direction of Lindsell Train i.e., Lindsell Train and Smithson Investment go up and down completely randomly.
Pair Corralation between Lindsell Train and Smithson Investment
Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 1.9 times more return on investment than Smithson Investment. However, Lindsell Train is 1.9 times more volatile than Smithson Investment Trust. It trades about 0.12 of its potential returns per unit of risk. Smithson Investment Trust is currently generating about 0.11 per unit of risk. If you would invest 74,700 in Lindsell Train Investment on October 26, 2024 and sell it today you would earn a total of 9,400 from holding Lindsell Train Investment or generate 12.58% 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. Smithson Investment Trust
Performance |
| Timeline |
| Lindsell Train Investment |
| Smithson Investment Trust |
Lindsell Train and Smithson Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lindsell Train and Smithson Investment
The main advantage of trading using opposite Lindsell Train and Smithson Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, Smithson 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 Smithson Investment will offset losses from the drop in Smithson Investment's long position.| Lindsell Train vs. SupplyMe Capital PLC | Lindsell Train vs. Premier African Minerals | Lindsell Train vs. SANTANDER UK 8 | Lindsell Train vs. Tower Resources plc |
| Smithson Investment vs. Spirent Communications plc | Smithson Investment vs. PPHE Hotel Group | Smithson Investment vs. Verizon Communications | Smithson Investment vs. Zoom Video Communications |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |