Correlation Between Liquidity Services and Dmc Global
Can any of the company-specific risk be diversified away by investing in both Liquidity Services and Dmc 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 Liquidity Services and Dmc Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liquidity Services and Dmc Global, you can compare the effects of market volatilities on Liquidity Services and Dmc 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 Liquidity Services with a short position of Dmc Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liquidity Services and Dmc Global.
Diversification Opportunities for Liquidity Services and Dmc Global
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liquidity and Dmc is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Liquidity Services and Dmc Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dmc Global and Liquidity Services 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 Liquidity Services are associated (or correlated) with Dmc Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dmc Global has no effect on the direction of Liquidity Services i.e., Liquidity Services and Dmc Global go up and down completely randomly.
Pair Corralation between Liquidity Services and Dmc Global
Given the investment horizon of 90 days Liquidity Services is expected to generate 0.63 times more return on investment than Dmc Global. However, Liquidity Services is 1.58 times less risky than Dmc Global. It trades about 0.39 of its potential returns per unit of risk. Dmc Global is currently generating about -0.48 per unit of risk. If you would invest 2,174 in Liquidity Services on August 27, 2024 and sell it today you would earn a total of 366.00 from holding Liquidity Services or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liquidity Services vs. Dmc Global
Performance |
| Timeline |
| Liquidity Services |
| Dmc Global |
Liquidity Services and Dmc Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liquidity Services and Dmc Global
The main advantage of trading using opposite Liquidity Services and Dmc Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liquidity Services position performs unexpectedly, Dmc 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 Dmc Global will offset losses from the drop in Dmc Global's long position.| Liquidity Services vs. Qurate Retail Series | Liquidity Services vs. Qurate Retail | Liquidity Services vs. Dada Nexus | Liquidity Services vs. Natural Health Trend |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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