Correlation Between Liontrust Asset and GoldMining

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Can any of the company-specific risk be diversified away by investing in both Liontrust Asset and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on Liontrust Asset and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontrust Asset and GoldMining.

Diversification Opportunities for Liontrust Asset and GoldMining

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Liontrust and GoldMining is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and GoldMining go up and down completely randomly.

Pair Corralation between Liontrust Asset and GoldMining

Assuming the 90 days trading horizon Liontrust Asset Management is expected to generate 1.02 times more return on investment than GoldMining. However, Liontrust Asset is 1.02 times more volatile than GoldMining. It trades about -0.05 of its potential returns per unit of risk. GoldMining is currently generating about -0.17 per unit of risk. If you would invest  47,150  in Liontrust Asset Management on August 24, 2024 and sell it today you would lose (2,050) from holding Liontrust Asset Management or give up 4.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy60.87%
ValuesDaily Returns

Liontrust Asset Management  vs.  GoldMining

 Performance 
       Timeline  
Liontrust Asset Mana 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
GoldMining 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in GoldMining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GoldMining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Liontrust Asset and GoldMining Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Liontrust Asset and GoldMining

The main advantage of trading using opposite Liontrust Asset and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontrust Asset position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.
The idea behind Liontrust Asset Management and GoldMining 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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