Correlation Between Livermore Investments and Bank of Georgia
Can any of the company-specific risk be diversified away by investing in both Livermore Investments and Bank of Georgia 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 Livermore Investments and Bank of Georgia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Livermore Investments Group and Bank of Georgia, you can compare the effects of market volatilities on Livermore Investments and Bank of Georgia 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 Livermore Investments with a short position of Bank of Georgia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Livermore Investments and Bank of Georgia.
Diversification Opportunities for Livermore Investments and Bank of Georgia
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Livermore and Bank is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Livermore Investments Group and Bank of Georgia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Georgia and Livermore Investments 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 Livermore Investments Group are associated (or correlated) with Bank of Georgia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Georgia has no effect on the direction of Livermore Investments i.e., Livermore Investments and Bank of Georgia go up and down completely randomly.
Pair Corralation between Livermore Investments and Bank of Georgia
Assuming the 90 days trading horizon Livermore Investments Group is expected to generate 0.4 times more return on investment than Bank of Georgia. However, Livermore Investments Group is 2.52 times less risky than Bank of Georgia. It trades about 0.27 of its potential returns per unit of risk. Bank of Georgia is currently generating about -0.2 per unit of risk. If you would invest 4,460 in Livermore Investments Group on September 15, 2024 and sell it today you would earn a total of 170.00 from holding Livermore Investments Group or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Livermore Investments Group vs. Bank of Georgia
Performance |
| Timeline |
| Livermore Investments |
| Bank of Georgia |
Livermore Investments and Bank of Georgia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Livermore Investments and Bank of Georgia
The main advantage of trading using opposite Livermore Investments and Bank of Georgia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Livermore Investments position performs unexpectedly, Bank of Georgia 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 Bank of Georgia will offset losses from the drop in Bank of Georgia's long position.The idea behind Livermore Investments Group and Bank of Georgia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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