Correlation Between Perella Weinberg and Lion Financial

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

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

Diversification Opportunities for Perella Weinberg and Lion Financial

-0.27

Correlation Coefficient

Perella Weinberg  Lion Financial

Very good diversification

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

Pair Corralation between Perella Weinberg and Lion Financial

Considering the 90-day investment horizon Perella Weinberg Partners is expected to under-perform the Lion Financial. But the stock apears to be less risky and, when comparing its historical volatility, Perella Weinberg Partners is 6.04 times less risky than Lion Financial. The stock trades about -0.27 of its potential returns per unit of risk. The Lion Financial Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  0.78  in Lion Financial Group on October 6, 2024 and sell it today you would lose (0.07) from holding Lion Financial Group or give up 8.97% of portfolio value over 90 days.

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

Perella Weinberg Partners  vs.  Lion Financial Group

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.

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 fairly stable essential indicators, Lion Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Perella Weinberg and Lion Financial

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

The idea behind Perella Weinberg Partners and Lion Financial Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.