Correlation Between Litigation Capital and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Litigation Capital and XLMedia 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 XLMedia 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 XLMedia PLC, you can compare the effects of market volatilities on Litigation Capital and XLMedia 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 XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litigation Capital and XLMedia PLC.
Diversification Opportunities for Litigation Capital and XLMedia PLC
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Litigation and XLMedia is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Litigation Capital Management and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia 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 XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Litigation Capital i.e., Litigation Capital and XLMedia PLC go up and down completely randomly.
Pair Corralation between Litigation Capital and XLMedia PLC
Assuming the 90 days trading horizon Litigation Capital Management is expected to generate 0.55 times more return on investment than XLMedia PLC. However, Litigation Capital Management is 1.83 times less risky than XLMedia PLC. It trades about 0.19 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.01 per unit of risk. If you would invest 11,350 in Litigation Capital Management on September 2, 2024 and sell it today you would earn a total of 350.00 from holding Litigation Capital Management or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litigation Capital Management vs. XLMedia PLC
Performance |
| Timeline |
| Litigation Capital |
| XLMedia PLC |
Litigation Capital and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litigation Capital and XLMedia PLC
The main advantage of trading using opposite Litigation Capital and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litigation Capital position performs unexpectedly, XLMedia 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Litigation Capital vs. Toyota Motor Corp | Litigation Capital vs. SoftBank Group Corp | Litigation Capital vs. OTP Bank Nyrt | Litigation Capital vs. Las Vegas Sands |
| XLMedia PLC vs. Premier Foods PLC | XLMedia PLC vs. Endeavour Mining Corp | XLMedia PLC vs. Associated British Foods | XLMedia PLC vs. Bisichi Mining PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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