Correlation Between Liontrust Asset and Litigation Capital

Can any of the company-specific risk be diversified away by investing in both Liontrust Asset and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Liontrust Asset and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontrust Asset and Litigation Capital.

Diversification Opportunities for Liontrust Asset and Litigation Capital

-0.92

Correlation Coefficient

Liontrust Asset  Litigation Capital

Pay attention - limited upside

The 3 months correlation between Liontrust and Litigation is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and Litigation Capital go up and down completely randomly.

Pair Corralation between Liontrust Asset and Litigation Capital

Assuming the 90 days trading horizon Liontrust Asset Management is expected to under-perform the Litigation Capital. But the stock apears to be less risky and, when comparing its historical volatility, Liontrust Asset Management is 1.1 times less risky than Litigation Capital. The stock trades about -0.18 of its potential returns per unit of risk. The Litigation Capital Management is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,925  in Litigation Capital Management on August 31, 2024 and sell it today you would earn a total of  1,800  from holding Litigation Capital Management or generate 18.14% return on investment over 90 days.

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

Liontrust Asset Management  vs.  Litigation Capital Management

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 uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Litigation Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Litigation Capital Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Litigation Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liontrust Asset and Litigation Capital

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

The idea behind Liontrust Asset Management and Litigation Capital 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.