Correlation Between Liontrust Asset and Ibstock PLC

Can any of the company-specific risk be diversified away by investing in both Liontrust Asset and Ibstock PLC 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 Liontrust Asset and Ibstock PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Liontrust Asset Management and Ibstock PLC, you can compare the effects of market volatilities on Liontrust Asset and Ibstock PLC 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 Liontrust Asset with a short position of Ibstock PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontrust Asset and Ibstock PLC.

Diversification Opportunities for Liontrust Asset and Ibstock PLC

-0.27

Correlation Coefficient

Liontrust Asset  Ibstock PLC

Very good diversification

The 3 months correlation between Liontrust and Ibstock is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and Ibstock PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibstock PLC and Liontrust Asset 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 Liontrust Asset Management are associated (or correlated) with Ibstock PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibstock PLC has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and Ibstock PLC go up and down completely randomly.

Pair Corralation between Liontrust Asset and Ibstock PLC

Assuming the 90 days trading horizon Liontrust Asset Management is expected to generate 1.29 times more return on investment than Ibstock PLC. However, Liontrust Asset is 1.29 times more volatile than Ibstock PLC. It trades about -0.12 of its potential returns per unit of risk. Ibstock PLC is currently generating about -0.4 per unit of risk. If you would invest  49,100  in Liontrust Asset Management on October 8, 2024 and sell it today you would lose (1,750) from holding Liontrust Asset Management or give up 3.56% of portfolio value over 90 days.

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

Liontrust Asset Management  vs.  Ibstock PLC

Liontrust Asset Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Liontrust Asset is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ibstock PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibstock PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ibstock PLC is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liontrust Asset and Ibstock PLC

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

The idea behind Liontrust Asset Management and Ibstock 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.