Correlation Between Herald Investment and Tatton Asset

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Can any of the company-specific risk be diversified away by investing in both Herald Investment and Tatton Asset 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 Herald Investment and Tatton Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Tatton Asset Management, you can compare the effects of market volatilities on Herald Investment and Tatton Asset 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 Herald Investment with a short position of Tatton Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Tatton Asset.

Diversification Opportunities for Herald Investment and Tatton Asset

0.34
  Correlation Coefficient

Weak diversification

The 3 months correlation between Herald and Tatton is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Herald Investment i.e., Herald Investment and Tatton Asset go up and down completely randomly.

Pair Corralation between Herald Investment and Tatton Asset

Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.77 times more return on investment than Tatton Asset. However, Herald Investment Trust is 1.3 times less risky than Tatton Asset. It trades about 0.08 of its potential returns per unit of risk. Tatton Asset Management is currently generating about 0.03 per unit of risk. If you would invest  217,000  in Herald Investment Trust on September 30, 2024 and sell it today you would earn a total of  27,500  from holding Herald Investment Trust or generate 12.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Herald Investment Trust  vs.  Tatton Asset Management

 Performance 
       Timeline  
Herald Investment Trust 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Herald Investment Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Herald Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.
Tatton Asset Management 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Tatton Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Tatton Asset is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Herald Investment and Tatton Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Herald Investment and Tatton Asset

The main advantage of trading using opposite Herald Investment and Tatton Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Tatton Asset 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 Tatton Asset will offset losses from the drop in Tatton Asset's long position.
The idea behind Herald Investment Trust and Tatton Asset Management 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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