Correlation Between Lindsell Train and Bellevue Healthcare

Can any of the company-specific risk be diversified away by investing in both Lindsell Train and Bellevue Healthcare 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 Bellevue Healthcare 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 Bellevue Healthcare Trust, you can compare the effects of market volatilities on Lindsell Train and Bellevue Healthcare 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 Bellevue Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lindsell Train and Bellevue Healthcare.

Diversification Opportunities for Lindsell Train and Bellevue Healthcare

0.15

Correlation Coefficient

Lindsell Train  Bellevue Healthcare

Average diversification

The 3 months correlation between Lindsell and Bellevue is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Bellevue Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Healthcare 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 Bellevue Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Healthcare Trust has no effect on the direction of Lindsell Train i.e., Lindsell Train and Bellevue Healthcare go up and down completely randomly.

Pair Corralation between Lindsell Train and Bellevue Healthcare

Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 1.48 times more return on investment than Bellevue Healthcare. However, Lindsell Train is 1.48 times more volatile than Bellevue Healthcare Trust. It trades about -0.02 of its potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about -0.57 per unit of risk. If you would invest  84,600  in Lindsell Train Investment on December 5, 2024 and sell it today you would lose (800.00) from holding Lindsell Train Investment or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Lindsell Train Investment  vs.  Bellevue Healthcare Trust

Lindsell Train Investment

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsell Train Investment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Lindsell Train exhibited solid returns over the last few months and may actually be approaching a breakup point.

Bellevue Healthcare Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bellevue Healthcare is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lindsell Train and Bellevue Healthcare

The main advantage of trading using opposite Lindsell Train and Bellevue Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lindsell Train position performs unexpectedly, Bellevue Healthcare 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 Bellevue Healthcare will offset losses from the drop in Bellevue Healthcare's long position.

The idea behind Lindsell Train Investment and Bellevue Healthcare Trust 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.