Correlation Between Lion Financial and Perella Weinberg

Can any of the company-specific risk be diversified away by investing in both Lion Financial and Perella Weinberg 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 Lion Financial and Perella Weinberg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lion Financial Group and Perella Weinberg Partners, you can compare the effects of market volatilities on Lion Financial and Perella Weinberg 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 Lion Financial with a short position of Perella Weinberg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Financial and Perella Weinberg.

Diversification Opportunities for Lion Financial and Perella Weinberg

-0.12

Correlation Coefficient

Lion Financial  Perella Weinberg

Good diversification

The 3 months correlation between Lion and Perella is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lion Financial Group and Perella Weinberg Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perella Weinberg Partners and Lion Financial 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 Lion Financial Group are associated (or correlated) with Perella Weinberg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perella Weinberg Partners has no effect on the direction of Lion Financial i.e., Lion Financial and Perella Weinberg go up and down completely randomly.

Pair Corralation between Lion Financial and Perella Weinberg

Assuming the 90 days horizon Lion Financial Group is expected to generate 5.81 times more return on investment than Perella Weinberg. However, Lion Financial is 5.81 times more volatile than Perella Weinberg Partners. It trades about 0.04 of its potential returns per unit of risk. Perella Weinberg Partners is currently generating about 0.09 per unit of risk. If you would invest  4.15  in Lion Financial Group on October 4, 2024 and sell it today you would lose (3.42) from holding Lion Financial Group or give up 82.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.38%
Values	Daily Returns

Lion Financial Group  vs.  Perella Weinberg Partners

Lion Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lion Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's essential indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Perella Weinberg Partners

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Perella Weinberg Partners are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Perella Weinberg reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lion Financial and Perella Weinberg

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

The idea behind Lion Financial Group and Perella Weinberg Partners 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 Global Correlations module to find global opportunities by holding instruments from different markets.