Correlation Between Retail Estates and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Retail Estates 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 Retail Estates and Litigation Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Litigation Capital Management, you can compare the effects of market volatilities on Retail Estates 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 Retail Estates with a short position of Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Litigation Capital.
Diversification Opportunities for Retail Estates and Litigation Capital
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Retail and Litigation is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital and Retail Estates 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 Retail Estates NV 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 Retail Estates i.e., Retail Estates and Litigation Capital go up and down completely randomly.
Pair Corralation between Retail Estates and Litigation Capital
Assuming the 90 days trading horizon Retail Estates is expected to generate 1.98 times less return on investment than Litigation Capital. In addition to that, Retail Estates is 2.33 times more volatile than Litigation Capital Management. It trades about 0.03 of its total potential returns per unit of risk. Litigation Capital Management is currently generating about 0.13 per unit of volatility. If you would invest 10,073 in Litigation Capital Management on August 25, 2024 and sell it today you would earn a total of 1,502 from holding Litigation Capital Management or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Retail Estates NV vs. Litigation Capital Management
Performance |
| Timeline |
| Retail Estates NV |
| Litigation Capital |
Retail Estates and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Litigation Capital
The main advantage of trading using opposite Retail Estates and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates 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.| Retail Estates vs. Samsung Electronics Co | Retail Estates vs. Samsung Electronics Co | Retail Estates vs. Hyundai Motor | Retail Estates vs. Toyota Motor Corp |
| Litigation Capital vs. Catalyst Media Group | Litigation Capital vs. Oncimmune Holdings plc | Litigation Capital vs. Invesco Health Care | Litigation Capital vs. Coor Service Management |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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