Correlation Between Liberty Financial and WiseTech Global
Can any of the company-specific risk be diversified away by investing in both Liberty Financial and WiseTech Global 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 WiseTech Global 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 WiseTech Global Limited, you can compare the effects of market volatilities on Liberty Financial and WiseTech Global 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 WiseTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Financial and WiseTech Global.
Diversification Opportunities for Liberty Financial and WiseTech Global
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and WiseTech is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global 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 WiseTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseTech Global has no effect on the direction of Liberty Financial i.e., Liberty Financial and WiseTech Global go up and down completely randomly.
Pair Corralation between Liberty Financial and WiseTech Global
Assuming the 90 days trading horizon Liberty Financial Group is expected to generate 1.15 times more return on investment than WiseTech Global. However, Liberty Financial is 1.15 times more volatile than WiseTech Global Limited. It trades about 0.33 of its potential returns per unit of risk. WiseTech Global Limited is currently generating about -0.1 per unit of risk. If you would invest 332.00 in Liberty Financial Group on October 24, 2024 and sell it today you would earn a total of 41.00 from holding Liberty Financial Group or generate 12.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Financial Group vs. WiseTech Global Limited
Performance |
| Timeline |
| Liberty Financial |
| WiseTech Global |
Liberty Financial and WiseTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Financial and WiseTech Global
The main advantage of trading using opposite Liberty Financial and WiseTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Financial position performs unexpectedly, WiseTech Global 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 WiseTech Global will offset losses from the drop in WiseTech Global's long position.| Liberty Financial vs. Pure Foods Tasmania | Liberty Financial vs. DY6 Metals | Liberty Financial vs. Sky Metals | Liberty Financial vs. Centrex Metals |
| WiseTech Global vs. Aristocrat Leisure | WiseTech Global vs. Liberty Financial Group | WiseTech Global vs. Cleanaway Waste Management | WiseTech Global vs. National Australia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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