Correlation Between Technology One and Lindblad Expeditions

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

By analyzing existing cross correlation between Technology One Limited and Lindblad Expeditions Holdings, you can compare the effects of market volatilities on Technology One and Lindblad Expeditions 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 Technology One with a short position of Lindblad Expeditions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology One and Lindblad Expeditions.

Diversification Opportunities for Technology One and Lindblad Expeditions

0.88

Correlation Coefficient

Technology One  Lindblad Expeditions

Very poor diversification

The 3 months correlation between Technology and Lindblad is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Technology One Limited and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions and Technology One 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 Technology One Limited are associated (or correlated) with Lindblad Expeditions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lindblad Expeditions has no effect on the direction of Technology One i.e., Technology One and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between Technology One and Lindblad Expeditions

Assuming the 90 days horizon Technology One Limited is expected to generate 1.38 times more return on investment than Lindblad Expeditions. However, Technology One is 1.38 times more volatile than Lindblad Expeditions Holdings. It trades about 0.24 of its potential returns per unit of risk. Lindblad Expeditions Holdings is currently generating about -0.17 per unit of risk. If you would invest  1,633  in Technology One Limited on September 18, 2024 and sell it today you would earn a total of  337.00  from holding Technology One Limited or generate 20.64% return on investment over 90 days.

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

Technology One Limited  vs.  Lindblad Expeditions Holdings

Technology One

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technology One Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Technology One reported solid returns over the last few months and may actually be approaching a breakup point.

Lindblad Expeditions

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Technology One and Lindblad Expeditions

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

The idea behind Technology One Limited and Lindblad Expeditions Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.