Correlation Between Liontrust Asset and Ithaca Energy
Can any of the company-specific risk be diversified away by investing in both Liontrust Asset and Ithaca Energy 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 Ithaca Energy 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 Ithaca Energy PLC, you can compare the effects of market volatilities on Liontrust Asset and Ithaca Energy 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 Ithaca Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontrust Asset and Ithaca Energy.
Diversification Opportunities for Liontrust Asset and Ithaca Energy
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liontrust and Ithaca is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management and Ithaca Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ithaca Energy 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 Ithaca Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ithaca Energy PLC has no effect on the direction of Liontrust Asset i.e., Liontrust Asset and Ithaca Energy go up and down completely randomly.
Pair Corralation between Liontrust Asset and Ithaca Energy
Assuming the 90 days trading horizon Liontrust Asset Management is expected to under-perform the Ithaca Energy. But the stock apears to be less risky and, when comparing its historical volatility, Liontrust Asset Management is 1.05 times less risky than Ithaca Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Ithaca Energy PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 17,372 in Ithaca Energy PLC on August 27, 2024 and sell it today you would lose (5,812) from holding Ithaca Energy PLC or give up 33.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.78% |
| Values | Daily Returns |
Liontrust Asset Management vs. Ithaca Energy PLC
Performance |
| Timeline |
| Liontrust Asset Mana |
| Ithaca Energy PLC |
Liontrust Asset and Ithaca Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liontrust Asset and Ithaca Energy
The main advantage of trading using opposite Liontrust Asset and Ithaca Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontrust Asset position performs unexpectedly, Ithaca Energy 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 Ithaca Energy will offset losses from the drop in Ithaca Energy's long position.| Liontrust Asset vs. Tata Steel Limited | Liontrust Asset vs. BE Semiconductor Industries | Liontrust Asset vs. Nordic Semiconductor ASA | Liontrust Asset vs. Infrastrutture Wireless Italiane |
| Ithaca Energy vs. Liontrust Asset Management | Ithaca Energy vs. Cairo Communication SpA | Ithaca Energy vs. Gamma Communications PLC | Ithaca Energy vs. Waste 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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