Correlation Between Liontrust Asset and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Liontrust Asset and Solstad Offshore 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 Solstad Offshore 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 Solstad Offshore ASA, you can compare the effects of market volatilities on Liontrust Asset and Solstad Offshore 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 Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontrust Asset and Solstad Offshore.
Diversification Opportunities for Liontrust Asset and Solstad Offshore
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liontrust and Solstad is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA 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 Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and Solstad Offshore go up and down completely randomly.
Pair Corralation between Liontrust Asset and Solstad Offshore
Assuming the 90 days trading horizon Liontrust Asset is expected to generate 22.56 times less return on investment than Solstad Offshore. But when comparing it to its historical volatility, Liontrust Asset Management is 1.57 times less risky than Solstad Offshore. It trades about 0.02 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3,190 in Solstad Offshore ASA on August 30, 2024 and sell it today you would earn a total of 1,110 from holding Solstad Offshore ASA or generate 34.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Liontrust Asset Management vs. Solstad Offshore ASA
Performance |
Timeline |
Liontrust Asset Mana |
Solstad Offshore ASA |
Liontrust Asset and Solstad Offshore Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Liontrust Asset and Solstad Offshore
The main advantage of trading using opposite Liontrust Asset and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontrust Asset position performs unexpectedly, Solstad Offshore 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 Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.Liontrust Asset vs. Toyota Motor Corp | Liontrust Asset vs. Neometals | Liontrust Asset vs. Coor Service Management | Liontrust Asset vs. Jupiter Fund Management |
Solstad Offshore vs. Lendinvest PLC | Solstad Offshore vs. Neometals | Solstad Offshore vs. Albion Technology General | Solstad Offshore vs. Jupiter Fund 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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