Correlation Between Liberty Financial and Advanced Braking
Can any of the company-specific risk be diversified away by investing in both Liberty Financial and Advanced Braking 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 Financial and Advanced Braking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Financial Group and Advanced Braking Technology, you can compare the effects of market volatilities on Liberty Financial and Advanced Braking 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 Financial with a short position of Advanced Braking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and Advanced Braking.
Diversification Opportunities for Liberty Financial and Advanced Braking
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Liberty and Advanced is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and Advanced Braking Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Braking Tec and Liberty Financial 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 Financial Group are associated (or correlated) with Advanced Braking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Braking Tec has no effect on the direction of Liberty Financial i.e., Liberty Financial and Advanced Braking go up and down completely randomly.
Pair Corralation between Liberty Financial and Advanced Braking
Assuming the 90 days trading horizon Liberty Financial Group is expected to generate 0.91 times more return on investment than Advanced Braking. However, Liberty Financial Group is 1.1 times less risky than Advanced Braking. It trades about 0.16 of its potential returns per unit of risk. Advanced Braking Technology is currently generating about 0.08 per unit of risk. If you would invest 345.00 in Liberty Financial Group on November 9, 2024 and sell it today you would earn a total of 24.00 from holding Liberty Financial Group or generate 6.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Financial Group vs. Advanced Braking Technology
Performance |
| Timeline |
| Liberty Financial |
| Advanced Braking Tec |
Liberty Financial and Advanced Braking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Financial and Advanced Braking
The main advantage of trading using opposite Liberty Financial and Advanced Braking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial position performs unexpectedly, Advanced Braking 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 Advanced Braking will offset losses from the drop in Advanced Braking's long position.| Liberty Financial vs. Meeka Metals Limited | Liberty Financial vs. My Foodie Box | Liberty Financial vs. Stelar Metals | Liberty Financial vs. Super Retail Group |
| Advanced Braking vs. Qbe Insurance Group | Advanced Braking vs. Bell Financial Group | Advanced Braking vs. Auswide Bank | Advanced Braking vs. Insurance Australia Group |
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.
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