Correlation Between Liontrust Asset and Sovereign Metals

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

Diversification Opportunities for Liontrust Asset and Sovereign Metals

-0.14

Correlation Coefficient

Liontrust Asset  Sovereign Metals

Good diversification

The 3 months correlation between Liontrust and Sovereign is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and Sovereign Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals 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 Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and Sovereign Metals go up and down completely randomly.

Pair Corralation between Liontrust Asset and Sovereign Metals

Assuming the 90 days trading horizon Liontrust Asset Management is expected to under-perform the Sovereign Metals. In addition to that, Liontrust Asset is 1.04 times more volatile than Sovereign Metals. It trades about -0.04 of its total potential returns per unit of risk. Sovereign Metals is currently generating about 0.08 per unit of volatility. If you would invest  4,050  in Sovereign Metals on December 2, 2024 and sell it today you would earn a total of  400.00  from holding Sovereign Metals or generate 9.88% return on investment over 90 days.

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

Liontrust Asset Management  vs.  Sovereign Metals

Liontrust Asset Mana

Risk-Adjusted Performance

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sovereign Metals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sovereign Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sovereign Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Liontrust Asset and Sovereign Metals

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

The idea behind Liontrust Asset Management and Sovereign Metals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.