Correlation Between Litigation Capital and Associated British
Can any of the company-specific risk be diversified away by investing in both Litigation Capital and Associated British 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 Associated British 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 Associated British Foods, you can compare the effects of market volatilities on Litigation Capital and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Associated British.
Diversification Opportunities for Litigation Capital and Associated British
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Litigation and Associated is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of Litigation Capital i.e., Litigation Capital and Associated British go up and down completely randomly.
Pair Corralation between Litigation Capital and Associated British
Assuming the 90 days trading horizon Litigation Capital Management is expected to generate 1.8 times more return on investment than Associated British. However, Litigation Capital is 1.8 times more volatile than Associated British Foods. It trades about 0.06 of its potential returns per unit of risk. Associated British Foods is currently generating about 0.06 per unit of risk. If you would invest 6,459 in Litigation Capital Management on August 30, 2024 and sell it today you would earn a total of 5,116 from holding Litigation Capital Management or generate 79.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. Associated British Foods
Performance |
| Timeline |
| Litigation Capital |
| Associated British Foods |
Litigation Capital and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Associated British
The main advantage of trading using opposite Litigation Capital and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| Litigation Capital vs. Toyota Motor Corp | Litigation Capital vs. Neometals | Litigation Capital vs. Coor Service Management | Litigation Capital vs. Jupiter Fund Management |
| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Toyota Motor Corp | Associated British vs. MOL Hungarian Oil |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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