Correlation Between Liberty Financial and Apiam Animal
Can any of the company-specific risk be diversified away by investing in both Liberty Financial and Apiam Animal 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 Apiam Animal 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 Apiam Animal Health, you can compare the effects of market volatilities on Liberty Financial and Apiam Animal 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 Apiam Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and Apiam Animal.
Diversification Opportunities for Liberty Financial and Apiam Animal
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Liberty and Apiam is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and Apiam Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apiam Animal Health 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 Apiam Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apiam Animal Health has no effect on the direction of Liberty Financial i.e., Liberty Financial and Apiam Animal go up and down completely randomly.
Pair Corralation between Liberty Financial and Apiam Animal
Assuming the 90 days trading horizon Liberty Financial Group is expected to under-perform the Apiam Animal. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Financial Group is 1.74 times less risky than Apiam Animal. The stock trades about -0.08 of its potential returns per unit of risk. The Apiam Animal Health is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Apiam Animal Health on September 27, 2024 and sell it today you would earn a total of 3.00 from holding Apiam Animal Health or generate 8.33% 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. Apiam Animal Health
Performance |
| Timeline |
| Liberty Financial |
| Apiam Animal Health |
Liberty Financial and Apiam Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Financial and Apiam Animal
The main advantage of trading using opposite Liberty Financial and Apiam Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial position performs unexpectedly, Apiam Animal 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 Apiam Animal will offset losses from the drop in Apiam Animal's long position.| Liberty Financial vs. Apiam Animal Health | Liberty Financial vs. Sonic Healthcare | Liberty Financial vs. Iron Road | Liberty Financial vs. Ramsay Health Care |
| Apiam Animal vs. Renascor Resources | Apiam Animal vs. Venus Metals | Apiam Animal vs. Havilah Resources | Apiam Animal vs. Asara 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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