Correlation Between LIBERTY DEFENSE and Dow Jones
Can any of the company-specific risk be diversified away by investing in both LIBERTY DEFENSE and Dow Jones 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 LIBERTY DEFENSE and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIBERTY DEFENSE H and Dow Jones Industrial, you can compare the effects of market volatilities on LIBERTY DEFENSE and Dow Jones 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 LIBERTY DEFENSE with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIBERTY DEFENSE and Dow Jones.
Diversification Opportunities for LIBERTY DEFENSE and Dow Jones
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LIBERTY and Dow is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding LIBERTY DEFENSE H and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and LIBERTY DEFENSE 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 LIBERTY DEFENSE H are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of LIBERTY DEFENSE i.e., LIBERTY DEFENSE and Dow Jones go up and down completely randomly.
Pair Corralation between LIBERTY DEFENSE and Dow Jones
Assuming the 90 days trading horizon LIBERTY DEFENSE H is expected to generate 24.81 times more return on investment than Dow Jones. However, LIBERTY DEFENSE is 24.81 times more volatile than Dow Jones Industrial. It trades about 0.15 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.02 per unit of risk. If you would invest 30.00 in LIBERTY DEFENSE H on October 15, 2024 and sell it today you would earn a total of 26.00 from holding LIBERTY DEFENSE H or generate 86.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.16% |
| Values | Daily Returns |
LIBERTY DEFENSE H vs. Dow Jones Industrial
Performance |
| Timeline |
LIBERTY DEFENSE and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
LIBERTY DEFENSE H
Pair trading matchups for LIBERTY DEFENSE
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with LIBERTY DEFENSE and Dow Jones
The main advantage of trading using opposite LIBERTY DEFENSE and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIBERTY DEFENSE position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| LIBERTY DEFENSE vs. ASSA ABLOY AB | LIBERTY DEFENSE vs. Halma plc | LIBERTY DEFENSE vs. Allegion plc | LIBERTY DEFENSE vs. Superior Plus Corp |
| Dow Jones vs. LB Foster | Dow Jones vs. Definitive Healthcare Corp | Dow Jones vs. TFI International | Dow Jones vs. Ryanair Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |