Correlation Between Lindsell Train and Ikigai Ventures

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

Diversification Opportunities for Lindsell Train and Ikigai Ventures

-0.18

Correlation Coefficient

Lindsell Train  Ikigai Ventures

Good diversification

The 3 months correlation between Lindsell and Ikigai is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Lindsell Train Investment and Ikigai Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ikigai Ventures 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 Ikigai Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ikigai Ventures has no effect on the direction of Lindsell Train i.e., Lindsell Train and Ikigai Ventures go up and down completely randomly.

Pair Corralation between Lindsell Train and Ikigai Ventures

Assuming the 90 days trading horizon Lindsell Train Investment is expected to generate 4.14 times more return on investment than Ikigai Ventures. However, Lindsell Train is 4.14 times more volatile than Ikigai Ventures. It trades about -0.02 of its potential returns per unit of risk. Ikigai Ventures is currently generating about -0.09 per unit of risk. If you would invest  103,488  in Lindsell Train Investment on October 25, 2024 and sell it today you would lose (18,888) from holding Lindsell Train Investment or give up 18.25% of portfolio value over 90 days.

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

Lindsell Train Investment  vs.  Ikigai Ventures

Lindsell Train Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lindsell Train Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Lindsell Train exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ikigai Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ikigai Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ikigai Ventures is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lindsell Train and Ikigai Ventures

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

The idea behind Lindsell Train Investment and Ikigai Ventures 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.