Correlation Between Fair Oaks and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Fair Oaks 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 Fair Oaks and Litigation Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and Litigation Capital Management, you can compare the effects of market volatilities on Fair Oaks 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 Fair Oaks with a short position of Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Litigation Capital.
Diversification Opportunities for Fair Oaks and Litigation Capital
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fair and Litigation is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital and Fair Oaks 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 Fair Oaks Income 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 Fair Oaks i.e., Fair Oaks and Litigation Capital go up and down completely randomly.
Pair Corralation between Fair Oaks and Litigation Capital
Assuming the 90 days trading horizon Fair Oaks is expected to generate 2.71 times less return on investment than Litigation Capital. But when comparing it to its historical volatility, Fair Oaks Income is 4.0 times less risky than Litigation Capital. It trades about 0.1 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,788 in Litigation Capital Management on August 31, 2024 and sell it today you would earn a total of 4,912 from holding Litigation Capital Management or generate 72.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Fair Oaks Income vs. Litigation Capital Management
Performance |
| Timeline |
| Fair Oaks Income |
| Litigation Capital |
Fair Oaks and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Litigation Capital
The main advantage of trading using opposite Fair Oaks and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks 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.| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. SoftBank Group Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Las Vegas Sands |
| Litigation Capital vs. AMG Advanced Metallurgical | Litigation Capital vs. American Homes 4 | Litigation Capital vs. Cairn Homes PLC | Litigation Capital vs. Ecclesiastical Insurance Office |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |