Correlation Between Summit Therapeutics and Lindblad Expeditions

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

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

Diversification Opportunities for Summit Therapeutics and Lindblad Expeditions

-0.39

Correlation Coefficient

Summit Therapeutics  Lindblad Expeditions

Very good diversification

The 3 months correlation between Summit and Lindblad is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC and Lindblad Expeditions Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lindblad Expeditions and Summit Therapeutics 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 Summit Therapeutics PLC 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 Summit Therapeutics i.e., Summit Therapeutics and Lindblad Expeditions go up and down completely randomly.

Pair Corralation between Summit Therapeutics and Lindblad Expeditions

Given the investment horizon of 90 days Summit Therapeutics PLC is expected to under-perform the Lindblad Expeditions. In addition to that, Summit Therapeutics is 1.05 times more volatile than Lindblad Expeditions Holdings. It trades about -0.04 of its total potential returns per unit of risk. Lindblad Expeditions Holdings is currently generating about 0.08 per unit of volatility. If you would invest  1,051  in Lindblad Expeditions Holdings on September 23, 2024 and sell it today you would earn a total of  197.00  from holding Lindblad Expeditions Holdings or generate 18.74% return on investment over 90 days.

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

Summit Therapeutics PLC  vs.  Lindblad Expeditions Holdings

Summit Therapeutics PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Therapeutics PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Lindblad Expeditions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lindblad Expeditions Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Lindblad Expeditions exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Therapeutics and Lindblad Expeditions

The main advantage of trading using opposite Summit Therapeutics and Lindblad Expeditions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Therapeutics 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 Summit Therapeutics PLC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.