Correlation Between Lords Grp and Fevertree Drinks

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

By analyzing existing cross correlation between Lords Grp Trading and Fevertree Drinks Plc, you can compare the effects of market volatilities on Lords Grp and Fevertree Drinks 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 Lords Grp with a short position of Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lords Grp and Fevertree Drinks.

Diversification Opportunities for Lords Grp and Fevertree Drinks

0.85

Correlation Coefficient

Lords Grp  Fevertree Drinks

Very poor diversification

The 3 months correlation between Lords and Fevertree is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Lords Grp Trading and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks Plc and Lords Grp 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 Lords Grp Trading are associated (or correlated) with Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Lords Grp i.e., Lords Grp and Fevertree Drinks go up and down completely randomly.

Pair Corralation between Lords Grp and Fevertree Drinks

Assuming the 90 days trading horizon Lords Grp Trading is expected to generate 2.09 times more return on investment than Fevertree Drinks. However, Lords Grp is 2.09 times more volatile than Fevertree Drinks Plc. It trades about 0.3 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about 0.18 per unit of risk. If you would invest  2,612  in Lords Grp Trading on April 22, 2025 and sell it today you would earn a total of  2,238  from holding Lords Grp Trading or generate 85.68% return on investment over 90 days.

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

Lords Grp Trading  vs.  Fevertree Drinks Plc

Lords Grp Trading

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lords Grp Trading are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Lords Grp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Fevertree Drinks Plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks Plc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fevertree Drinks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lords Grp and Fevertree Drinks

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

The idea behind Lords Grp Trading and Fevertree Drinks 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.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.