Correlation Between Vine Hill and Lionheart Holdings

Can any of the company-specific risk be diversified away by investing in both Vine Hill and Lionheart Holdings 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 Vine Hill and Lionheart Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vine Hill Capital and Lionheart Holdings, you can compare the effects of market volatilities on Vine Hill and Lionheart Holdings 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 Vine Hill with a short position of Lionheart Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vine Hill and Lionheart Holdings.

Diversification Opportunities for Vine Hill and Lionheart Holdings

0.96

Correlation Coefficient

Vine Hill  Lionheart Holdings

Almost no diversification

The 3 months correlation between Vine and Lionheart is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vine Hill Capital and Lionheart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionheart Holdings and Vine Hill 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 Vine Hill Capital are associated (or correlated) with Lionheart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionheart Holdings has no effect on the direction of Vine Hill i.e., Vine Hill and Lionheart Holdings go up and down completely randomly.

Pair Corralation between Vine Hill and Lionheart Holdings

Given the investment horizon of 90 days Vine Hill Capital is expected to generate 1.33 times more return on investment than Lionheart Holdings. However, Vine Hill is 1.33 times more volatile than Lionheart Holdings. It trades about 0.19 of its potential returns per unit of risk. Lionheart Holdings is currently generating about 0.24 per unit of risk. If you would invest  1,003  in Vine Hill Capital on December 29, 2024 and sell it today you would earn a total of  15.00  from holding Vine Hill Capital or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Vine Hill Capital  vs.  Lionheart Holdings

Vine Hill Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vine Hill Capital are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Vine Hill is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Lionheart Holdings

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lionheart Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Lionheart Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vine Hill and Lionheart Holdings

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

The idea behind Vine Hill Capital and Lionheart Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.