Correlation Between Liontrust Asset and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Liontrust Asset and Cairn Homes 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 Cairn Homes 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 Cairn Homes PLC, you can compare the effects of market volatilities on Liontrust Asset and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontrust Asset and Cairn Homes.
Diversification Opportunities for Liontrust Asset and Cairn Homes
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liontrust and Cairn is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and Cairn Homes go up and down completely randomly.
Pair Corralation between Liontrust Asset and Cairn Homes
Assuming the 90 days trading horizon Liontrust Asset Management is expected to generate 1.78 times more return on investment than Cairn Homes. However, Liontrust Asset is 1.78 times more volatile than Cairn Homes PLC. It trades about 0.24 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.27 per unit of risk. If you would invest 41,152 in Liontrust Asset Management on September 20, 2024 and sell it today you would earn a total of 5,548 from holding Liontrust Asset Management or generate 13.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liontrust Asset Management vs. Cairn Homes PLC
Performance |
| Timeline |
| Liontrust Asset Mana |
| Cairn Homes PLC |
Liontrust Asset and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontrust Asset and Cairn Homes
The main advantage of trading using opposite Liontrust Asset and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontrust Asset position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Liontrust Asset vs. Air Products Chemicals | Liontrust Asset vs. The Mercantile Investment | Liontrust Asset vs. Batm Advanced Communications | Liontrust Asset vs. United Internet AG |
| Cairn Homes vs. Litigation Capital Management | Cairn Homes vs. Liontrust Asset Management | Cairn Homes vs. Panther Metals PLC | Cairn Homes vs. Jacquet Metal Service |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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