Correlation Between Liberty Financial and Mayfield Childcare
Can any of the company-specific risk be diversified away by investing in both Liberty Financial and Mayfield Childcare 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 Mayfield Childcare 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 Mayfield Childcare, you can compare the effects of market volatilities on Liberty Financial and Mayfield Childcare 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 Mayfield Childcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and Mayfield Childcare.
Diversification Opportunities for Liberty Financial and Mayfield Childcare
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Liberty and Mayfield is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and Mayfield Childcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayfield Childcare 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 Mayfield Childcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayfield Childcare has no effect on the direction of Liberty Financial i.e., Liberty Financial and Mayfield Childcare go up and down completely randomly.
Pair Corralation between Liberty Financial and Mayfield Childcare
Assuming the 90 days trading horizon Liberty Financial Group is expected to generate 0.81 times more return on investment than Mayfield Childcare. However, Liberty Financial Group is 1.24 times less risky than Mayfield Childcare. It trades about 0.02 of its potential returns per unit of risk. Mayfield Childcare is currently generating about -0.06 per unit of risk. If you would invest 335.00 in Liberty Financial Group on November 1, 2024 and sell it today you would earn a total of 33.00 from holding Liberty Financial Group or generate 9.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Financial Group vs. Mayfield Childcare
Performance |
| Timeline |
| Liberty Financial |
| Mayfield Childcare |
Liberty Financial and Mayfield Childcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Financial and Mayfield Childcare
The main advantage of trading using opposite Liberty Financial and Mayfield Childcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial position performs unexpectedly, Mayfield Childcare 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 Mayfield Childcare will offset losses from the drop in Mayfield Childcare's long position.| Liberty Financial vs. Group 6 Metals | Liberty Financial vs. Stelar Metals | Liberty Financial vs. Black Rock Mining | Liberty Financial vs. COAST ENTERTAINMENT HOLDINGS |
| Mayfield Childcare vs. Liberty Financial Group | Mayfield Childcare vs. Sky Metals | Mayfield Childcare vs. Finexia Financial Group | Mayfield Childcare vs. Auswide Bank |
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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