Correlation Between Litigation Capital and AJ Bell
Can any of the company-specific risk be diversified away by investing in both Litigation Capital and AJ Bell 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 AJ Bell 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 AJ Bell plc, you can compare the effects of market volatilities on Litigation Capital and AJ Bell 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 AJ Bell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and AJ Bell.
Diversification Opportunities for Litigation Capital and AJ Bell
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Litigation and AJB is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and AJ Bell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Bell plc 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 AJ Bell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Bell plc has no effect on the direction of Litigation Capital i.e., Litigation Capital and AJ Bell go up and down completely randomly.
Pair Corralation between Litigation Capital and AJ Bell
Assuming the 90 days trading horizon Litigation Capital Management is expected to under-perform the AJ Bell. But the stock apears to be less risky and, when comparing its historical volatility, Litigation Capital Management is 1.05 times less risky than AJ Bell. The stock trades about -0.17 of its potential returns per unit of risk. The AJ Bell plc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 46,350 in AJ Bell plc on September 12, 2024 and sell it today you would earn a total of 1,300 from holding AJ Bell plc or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. AJ Bell plc
Performance |
| Timeline |
| Litigation Capital |
| AJ Bell plc |
Litigation Capital and AJ Bell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and AJ Bell
The main advantage of trading using opposite Litigation Capital and AJ Bell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital position performs unexpectedly, AJ Bell 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 AJ Bell will offset losses from the drop in AJ Bell's long position.| Litigation Capital vs. Samsung Electronics Co | Litigation Capital vs. Samsung Electronics Co | Litigation Capital vs. Hyundai Motor | Litigation Capital vs. Toyota Motor Corp |
| AJ Bell vs. BioNTech SE | AJ Bell vs. Raytheon Technologies Corp | AJ Bell vs. Concurrent Technologies Plc | AJ Bell vs. Roper Technologies |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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