Correlation Between Litigation Capital and Impax Asset
Can any of the company-specific risk be diversified away by investing in both Litigation Capital and Impax Asset 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 Impax Asset 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 Impax Asset Management, you can compare the effects of market volatilities on Litigation Capital and Impax Asset 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 Impax Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and Impax Asset.
Diversification Opportunities for Litigation Capital and Impax Asset
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Litigation and Impax is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and Impax Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impax Asset Management 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 Impax Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impax Asset Management has no effect on the direction of Litigation Capital i.e., Litigation Capital and Impax Asset go up and down completely randomly.
Pair Corralation between Litigation Capital and Impax Asset
Assuming the 90 days trading horizon Litigation Capital Management is expected to under-perform the Impax Asset. But the stock apears to be less risky and, when comparing its historical volatility, Litigation Capital Management is 1.01 times less risky than Impax Asset. The stock trades about -0.29 of its potential returns per unit of risk. The Impax Asset Management is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 24,950 in Impax Asset Management on November 3, 2024 and sell it today you would lose (2,850) from holding Impax Asset Management or give up 11.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. Impax Asset Management
Performance |
| Timeline |
| Litigation Capital |
| Impax Asset Management |
Litigation Capital and Impax Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and Impax Asset
The main advantage of trading using opposite Litigation Capital and Impax Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital position performs unexpectedly, Impax Asset 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 Impax Asset will offset losses from the drop in Impax Asset's long position.| Litigation Capital vs. Bankers Investment Trust | Litigation Capital vs. Dairy Farm International | Litigation Capital vs. Chrysalis Investments | Litigation Capital vs. Lowland Investment Co |
| Impax Asset vs. URU Metals | Impax Asset vs. European Metals Holdings | Impax Asset vs. Charter Communications Cl | Impax Asset vs. GreenX Metals |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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