Correlation Between Liberty Financial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Liberty Financial 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 Financial 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 Financial Group and Dow Jones Industrial, you can compare the effects of market volatilities on Liberty Financial 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 Financial with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and Dow Jones.
Diversification Opportunities for Liberty Financial and Dow Jones
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Dow is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group 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 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 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 Financial i.e., Liberty Financial and Dow Jones go up and down completely randomly.
Pair Corralation between Liberty Financial and Dow Jones
Assuming the 90 days trading horizon Liberty Financial Group is expected to generate 2.05 times more return on investment than Dow Jones. However, Liberty Financial is 2.05 times more volatile than Dow Jones Industrial. It trades about -0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.23 per unit of risk. If you would invest 329.00 in Liberty Financial Group on September 27, 2024 and sell it today you would lose (9.00) from holding Liberty Financial Group or give up 2.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Liberty Financial Group vs. Dow Jones Industrial
Performance |
| Timeline |
Liberty Financial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Liberty Financial Group
Pair trading matchups for Liberty Financial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Liberty Financial and Dow Jones
The main advantage of trading using opposite Liberty Financial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial 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 Financial vs. Apiam Animal Health | Liberty Financial vs. Sonic Healthcare | Liberty Financial vs. Iron Road | Liberty Financial vs. Ramsay Health Care |
| Dow Jones vs. 51Talk Online Education | Dow Jones vs. World Houseware Limited | Dow Jones vs. Beauty Health Co | Dow Jones vs. Acme United |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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