Correlation Between First and Lendinvest PLC

Can any of the company-specific risk be diversified away by investing in both First 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 First and Lendinvest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Class Metals and Lendinvest PLC, you can compare the effects of market volatilities on First 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 First with a short position of Lendinvest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Lendinvest PLC.

Diversification Opportunities for First and Lendinvest PLC

0.14

Correlation Coefficient

First  Lendinvest PLC

Average diversification

The 3 months correlation between First and Lendinvest is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals and Lendinvest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendinvest PLC and First 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 First Class Metals 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 First i.e., First and Lendinvest PLC go up and down completely randomly.

Pair Corralation between First and Lendinvest PLC

Assuming the 90 days trading horizon First Class Metals is expected to under-perform the Lendinvest PLC. In addition to that, First is 3.83 times more volatile than Lendinvest PLC. It trades about -0.05 of its total potential returns per unit of risk. Lendinvest PLC is currently generating about 0.14 per unit of volatility. If you would invest  2,450  in Lendinvest PLC on December 24, 2024 and sell it today you would earn a total of  320.00  from holding Lendinvest PLC or generate 13.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

First Class Metals  vs.  Lendinvest PLC

First Class Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Class Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lendinvest PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lendinvest PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lendinvest PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with First and Lendinvest PLC

The main advantage of trading using opposite First and Lendinvest PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First 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 First Class Metals 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.