Correlation Between Liberty Financial and Ausquest
Can any of the company-specific risk be diversified away by investing in both Liberty Financial and Ausquest 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 Ausquest 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 Ausquest, you can compare the effects of market volatilities on Liberty Financial and Ausquest 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 Ausquest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and Ausquest.
Diversification Opportunities for Liberty Financial and Ausquest
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liberty and Ausquest is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and Ausquest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ausquest 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 Ausquest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ausquest has no effect on the direction of Liberty Financial i.e., Liberty Financial and Ausquest go up and down completely randomly.
Pair Corralation between Liberty Financial and Ausquest
Assuming the 90 days trading horizon Liberty Financial is expected to generate 12.11 times less return on investment than Ausquest. But when comparing it to its historical volatility, Liberty Financial Group is 22.1 times less risky than Ausquest. It trades about 0.48 of its potential returns per unit of risk. Ausquest is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Ausquest on November 3, 2024 and sell it today you would earn a total of 2.70 from holding Ausquest or generate 337.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Liberty Financial Group vs. Ausquest
Performance |
| Timeline |
| Liberty Financial |
| Ausquest |
Liberty Financial and Ausquest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Financial and Ausquest
The main advantage of trading using opposite Liberty Financial and Ausquest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial position performs unexpectedly, Ausquest 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 Ausquest will offset losses from the drop in Ausquest's long position.| Liberty Financial vs. Retail Food Group | Liberty Financial vs. Magellan Financial Group | Liberty Financial vs. Constellation Technologies | Liberty Financial vs. Finexia Financial Group |
| Ausquest vs. Autosports Group | Ausquest vs. Flagship Investments | Ausquest vs. Qbe Insurance Group | Ausquest vs. Sandon Capital Investments |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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