Correlation Between Sky Metals and Liberty Financial
Can any of the company-specific risk be diversified away by investing in both Sky Metals and Liberty Financial 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 Sky Metals and Liberty Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sky Metals and Liberty Financial Group, you can compare the effects of market volatilities on Sky Metals and Liberty Financial 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 Sky Metals with a short position of Liberty Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sky Metals and Liberty Financial.
Diversification Opportunities for Sky Metals and Liberty Financial
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sky and Liberty is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sky Metals and Liberty Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Financial and Sky Metals 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 Sky Metals are associated (or correlated) with Liberty Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Financial has no effect on the direction of Sky Metals i.e., Sky Metals and Liberty Financial go up and down completely randomly.
Pair Corralation between Sky Metals and Liberty Financial
Assuming the 90 days trading horizon Sky Metals is expected to generate 26.86 times less return on investment than Liberty Financial. In addition to that, Sky Metals is 1.06 times more volatile than Liberty Financial Group. It trades about 0.01 of its total potential returns per unit of risk. Liberty Financial Group is currently generating about 0.25 per unit of volatility. If you would invest 333.00 in Liberty Financial Group on October 30, 2024 and sell it today you would earn a total of 29.00 from holding Liberty Financial Group or generate 8.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sky Metals vs. Liberty Financial Group
Performance |
| Timeline |
| Sky Metals |
| Liberty Financial |
Sky Metals and Liberty Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sky Metals and Liberty Financial
The main advantage of trading using opposite Sky Metals and Liberty Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sky Metals position performs unexpectedly, Liberty Financial 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 Financial will offset losses from the drop in Liberty Financial's long position.| Sky Metals vs. Dug Technology | Sky Metals vs. Aussie Broadband | Sky Metals vs. Argo Investments | Sky Metals vs. BKI Investment |
| Liberty Financial vs. De Grey Mining | Liberty Financial vs. Hutchison Telecommunications | Liberty Financial vs. Sun Silver Limited | Liberty Financial vs. Dalaroo Metals |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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