Correlation Between Liberty Financial and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both Liberty Financial and Australian Strategic 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 Australian Strategic 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 Australian Strategic Materials, you can compare the effects of market volatilities on Liberty Financial and Australian Strategic 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 Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and Australian Strategic.
Diversification Opportunities for Liberty Financial and Australian Strategic
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Australian is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic 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 Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Liberty Financial i.e., Liberty Financial and Australian Strategic go up and down completely randomly.
Pair Corralation between Liberty Financial and Australian Strategic
Assuming the 90 days trading horizon Liberty Financial Group is expected to generate 0.6 times more return on investment than Australian Strategic. However, Liberty Financial Group is 1.66 times less risky than Australian Strategic. It trades about 0.22 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about 0.05 per unit of risk. If you would invest 316.00 in Liberty Financial Group on October 30, 2024 and sell it today you would earn a total of 46.00 from holding Liberty Financial Group or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Financial Group vs. Australian Strategic Materials
Performance |
| Timeline |
| Liberty Financial |
| Australian Strategic |
Liberty Financial and Australian Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Financial and Australian Strategic
The main advantage of trading using opposite Liberty Financial and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial position performs unexpectedly, Australian Strategic 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 Australian Strategic will offset losses from the drop in Australian Strategic's long position.| Liberty Financial vs. De Grey Mining | Liberty Financial vs. Hutchison Telecommunications | Liberty Financial vs. Sun Silver Limited | Liberty Financial vs. Dalaroo Metals |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| 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 | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device |