Correlation Between Litigation Capital and BP PLC
Can any of the company-specific risk be diversified away by investing in both Litigation Capital and BP PLC 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 Litigation Capital and BP PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litigation Capital Management and BP PLC ADR, you can compare the effects of market volatilities on Litigation Capital and BP PLC 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 Litigation Capital with a short position of BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and BP PLC.
Diversification Opportunities for Litigation Capital and BP PLC
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Litigation and 0HKP is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR and Litigation Capital 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 Litigation Capital Management are associated (or correlated) with BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Litigation Capital i.e., Litigation Capital and BP PLC go up and down completely randomly.
Pair Corralation between Litigation Capital and BP PLC
Assuming the 90 days trading horizon Litigation Capital Management is expected to generate 0.61 times more return on investment than BP PLC. However, Litigation Capital Management is 1.65 times less risky than BP PLC. It trades about 0.25 of its potential returns per unit of risk. BP PLC ADR is currently generating about -0.04 per unit of risk. If you would invest 11,300 in Litigation Capital Management on September 4, 2024 and sell it today you would earn a total of 450.00 from holding Litigation Capital Management or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. BP PLC ADR
Performance |
| Timeline |
| Litigation Capital |
| BP PLC ADR |
Litigation Capital and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and BP PLC
The main advantage of trading using opposite Litigation Capital and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC's long position.| Litigation Capital vs. SupplyMe Capital PLC | Litigation Capital vs. Lloyds Banking Group | Litigation Capital vs. Premier African Minerals | Litigation Capital vs. SANTANDER UK 8 |
| BP PLC vs. Datalogic | BP PLC vs. Molson Coors Beverage | BP PLC vs. Tatton Asset Management | BP PLC vs. Monster Beverage Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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