Correlation Between Bank of the and Liberty Flour
Can any of the company-specific risk be diversified away by investing in both Bank of the and Liberty Flour 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 Bank of the and Liberty Flour into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of the and Liberty Flour Mills, you can compare the effects of market volatilities on Bank of the and Liberty Flour 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 Bank of the with a short position of Liberty Flour. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of the and Liberty Flour.
Diversification Opportunities for Bank of the and Liberty Flour
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Liberty is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bank of the and Liberty Flour Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Flour Mills and Bank of the 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 Bank of the are associated (or correlated) with Liberty Flour. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Flour Mills has no effect on the direction of Bank of the i.e., Bank of the and Liberty Flour go up and down completely randomly.
Pair Corralation between Bank of the and Liberty Flour
Assuming the 90 days trading horizon Bank of the is expected to generate 0.29 times more return on investment than Liberty Flour. However, Bank of the is 3.47 times less risky than Liberty Flour. It trades about 0.14 of its potential returns per unit of risk. Liberty Flour Mills is currently generating about -0.12 per unit of risk. If you would invest 12,000 in Bank of the on December 4, 2024 and sell it today you would earn a total of 700.00 from holding Bank of the or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 80.95% |
| Values | Daily Returns |
Bank of the vs. Liberty Flour Mills
Performance |
| Timeline |
| Bank of the |
| Liberty Flour Mills |
Bank of the and Liberty Flour Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of the and Liberty Flour
The main advantage of trading using opposite Bank of the and Liberty Flour positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of the position performs unexpectedly, Liberty Flour 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 Flour will offset losses from the drop in Liberty Flour's long position.| Bank of the vs. SM Investments Corp | Bank of the vs. Converge Information Communications | Bank of the vs. Swift Foods | Bank of the vs. National Reinsurance |
| Liberty Flour vs. Converge Information Communications | Liberty Flour vs. Prime Media Holdings | Liberty Flour vs. Semirara Mining Corp | Liberty Flour vs. Apex Mining Co |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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