Correlation Between Herald Investment and Liontrust Asset

Can any of the company-specific risk be diversified away by investing in both Herald Investment and Liontrust 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 Herald Investment and Liontrust Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Herald Investment Trust and Liontrust Asset Management, you can compare the effects of market volatilities on Herald Investment and Liontrust 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 Herald Investment with a short position of Liontrust Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Liontrust Asset.

Diversification Opportunities for Herald Investment and Liontrust Asset

-0.33

Correlation Coefficient

Herald Investment  Liontrust Asset

Very good diversification

The 3 months correlation between Herald and Liontrust is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Liontrust Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontrust Asset Mana and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Liontrust Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontrust Asset Mana has no effect on the direction of Herald Investment i.e., Herald Investment and Liontrust Asset go up and down completely randomly.

Pair Corralation between Herald Investment and Liontrust Asset

Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.37 times more return on investment than Liontrust Asset. However, Herald Investment Trust is 2.69 times less risky than Liontrust Asset. It trades about 0.3 of its potential returns per unit of risk. Liontrust Asset Management is currently generating about -0.07 per unit of risk. If you would invest  209,000  in Herald Investment Trust on September 14, 2024 and sell it today you would earn a total of  40,000  from holding Herald Investment Trust or generate 19.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Herald Investment Trust  vs.  Liontrust Asset Management

Herald Investment Trust

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Herald Investment Trust are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Herald Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

Liontrust Asset Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Herald Investment and Liontrust Asset

The main advantage of trading using opposite Herald Investment and Liontrust Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Liontrust 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 Liontrust Asset will offset losses from the drop in Liontrust Asset's long position.

The idea behind Herald Investment Trust and Liontrust Asset Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.