Correlation Between NYSE Composite and Liberty Defense
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Liberty Defense 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 NYSE Composite and Liberty Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Liberty Defense Holdings, you can compare the effects of market volatilities on NYSE Composite and Liberty Defense 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 NYSE Composite with a short position of Liberty Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Liberty Defense.
Diversification Opportunities for NYSE Composite and Liberty Defense
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NYSE and Liberty is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Liberty Defense Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Defense Holdings and NYSE Composite 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 NYSE Composite are associated (or correlated) with Liberty Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Defense Holdings has no effect on the direction of NYSE Composite i.e., NYSE Composite and Liberty Defense go up and down completely randomly.
Pair Corralation between NYSE Composite and Liberty Defense
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.21 times more return on investment than Liberty Defense. However, NYSE Composite is 4.68 times less risky than Liberty Defense. It trades about -0.12 of its potential returns per unit of risk. Liberty Defense Holdings is currently generating about -0.14 per unit of risk. If you would invest 2,018,129 in NYSE Composite on January 14, 2025 and sell it today you would lose (196,164) from holding NYSE Composite or give up 9.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
NYSE Composite vs. Liberty Defense Holdings
Performance |
| Timeline |
NYSE Composite and Liberty Defense Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Liberty Defense Holdings
Pair trading matchups for Liberty Defense
Pair Trading with NYSE Composite and Liberty Defense
The main advantage of trading using opposite NYSE Composite and Liberty Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Liberty Defense 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 Liberty Defense will offset losses from the drop in Liberty Defense's long position.| NYSE Composite vs. Vinci Partners Investments | NYSE Composite vs. Gladstone Investment | NYSE Composite vs. Greentown Management Holdings | NYSE Composite vs. Avient Corp |
| Liberty Defense vs. Bridger Aerospace Group | Liberty Defense vs. ATWEC Technologies | Liberty Defense vs. Brinks Company | Liberty Defense vs. Ameriguard Security Services |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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