Correlation Between Litigation Capital and Bankers Investment
Can any of the company-specific risk be diversified away by investing in both Litigation Capital and Bankers Investment 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 Bankers Investment 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 Bankers Investment Trust, you can compare the effects of market volatilities on Litigation Capital and Bankers Investment 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 Bankers Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Bankers Investment.
Diversification Opportunities for Litigation Capital and Bankers Investment
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Litigation and Bankers is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Bankers Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bankers Investment Trust 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 Bankers Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bankers Investment Trust has no effect on the direction of Litigation Capital i.e., Litigation Capital and Bankers Investment go up and down completely randomly.
Pair Corralation between Litigation Capital and Bankers Investment
Assuming the 90 days trading horizon Litigation Capital Management is expected to generate 4.16 times more return on investment than Bankers Investment. However, Litigation Capital is 4.16 times more volatile than Bankers Investment Trust. It trades about 0.07 of its potential returns per unit of risk. Bankers Investment Trust is currently generating about 0.16 per unit of risk. If you would invest 9,589 in Litigation Capital Management on September 12, 2024 and sell it today you would earn a total of 961.00 from holding Litigation Capital Management or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Litigation Capital Management vs. Bankers Investment Trust
Performance |
| Timeline |
| Litigation Capital |
| Bankers Investment Trust |
Litigation Capital and Bankers Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Bankers Investment
The main advantage of trading using opposite Litigation Capital and Bankers Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital position performs unexpectedly, Bankers Investment 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 Bankers Investment will offset losses from the drop in Bankers Investment's long position.| Litigation Capital vs. Intuitive Investments Group | Litigation Capital vs. Universal Display Corp | Litigation Capital vs. Batm Advanced Communications | Litigation Capital vs. Arrow Electronics |
| Bankers Investment vs. Catalyst Media Group | Bankers Investment vs. CATLIN GROUP | Bankers Investment vs. Tamburi Investment Partners | Bankers Investment vs. Magnora ASA |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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