Correlation Between 88 Energy and Liberty Financial
Can any of the company-specific risk be diversified away by investing in both 88 Energy and Liberty Financial 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 88 Energy and Liberty Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 88 Energy and Liberty Financial Group, you can compare the effects of market volatilities on 88 Energy and Liberty Financial 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 88 Energy with a short position of Liberty Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Liberty Financial.
Diversification Opportunities for 88 Energy and Liberty Financial
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 88E and Liberty is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy and Liberty Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Financial and 88 Energy 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 88 Energy are associated (or correlated) with Liberty Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Financial has no effect on the direction of 88 Energy i.e., 88 Energy and Liberty Financial go up and down completely randomly.
Pair Corralation between 88 Energy and Liberty Financial
Assuming the 90 days trading horizon 88 Energy is expected to generate 25.43 times more return on investment than Liberty Financial. However, 88 Energy is 25.43 times more volatile than Liberty Financial Group. It trades about 0.21 of its potential returns per unit of risk. Liberty Financial Group is currently generating about -0.09 per unit of risk. If you would invest 0.20 in 88 Energy on September 26, 2024 and sell it today you would earn a total of 0.00 from holding 88 Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
88 Energy vs. Liberty Financial Group
Performance |
| Timeline |
| 88 Energy |
| Liberty Financial |
88 Energy and Liberty Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 88 Energy and Liberty Financial
The main advantage of trading using opposite 88 Energy and Liberty Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy position performs unexpectedly, Liberty Financial 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 Liberty Financial will offset losses from the drop in Liberty Financial's long position.| 88 Energy vs. Westpac Banking | 88 Energy vs. ABACUS STORAGE KING | 88 Energy vs. Odyssey Energy | 88 Energy vs. Suncorp Group |
| Liberty Financial vs. Energy Resources | Liberty Financial vs. 88 Energy | Liberty Financial vs. Amani Gold | Liberty Financial vs. A1 Investments Resources |
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 CEOs Directory module to screen CEOs from public companies around the world.
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