Correlation Between Neometals and Lendinvest PLC
Can any of the company-specific risk be diversified away by investing in both Neometals and Lendinvest 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 Neometals and Lendinvest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neometals and Lendinvest PLC, you can compare the effects of market volatilities on Neometals and Lendinvest 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 Neometals with a short position of Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and Lendinvest PLC.
Diversification Opportunities for Neometals and Lendinvest PLC
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Neometals and Lendinvest is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC and Neometals 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 Neometals are associated (or correlated) with Lendinvest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendinvest PLC has no effect on the direction of Neometals i.e., Neometals and Lendinvest PLC go up and down completely randomly.
Pair Corralation between Neometals and Lendinvest PLC
Assuming the 90 days trading horizon Neometals is expected to under-perform the Lendinvest PLC. But the stock apears to be less risky and, when comparing its historical volatility, Neometals is 1.05 times less risky than Lendinvest PLC. The stock trades about -0.21 of its potential returns per unit of risk. The Lendinvest PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,600 in Lendinvest PLC on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Lendinvest PLC or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neometals vs. Lendinvest PLC
Performance |
| Timeline |
| Neometals |
| Lendinvest PLC |
Neometals and Lendinvest PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neometals and Lendinvest PLC
The main advantage of trading using opposite Neometals and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals position performs unexpectedly, Lendinvest 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 Lendinvest PLC will offset losses from the drop in Lendinvest PLC's long position.The idea behind Neometals and Lendinvest PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lendinvest PLC vs. Toyota Motor Corp | Lendinvest PLC vs. Neometals | Lendinvest PLC vs. Coor Service Management | Lendinvest PLC vs. Albion Technology General |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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