Correlation Between Ameriguard Security and Liberty Defense

Can any of the company-specific risk be diversified away by investing in both Ameriguard Security 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 Ameriguard Security and Liberty Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ameriguard Security Services and Liberty Defense Holdings, you can compare the effects of market volatilities on Ameriguard Security 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 Ameriguard Security with a short position of Liberty Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ameriguard Security and Liberty Defense.

Diversification Opportunities for Ameriguard Security and Liberty Defense

0.75

Correlation Coefficient

Ameriguard Security  Liberty Defense

Poor diversification

The 3 months correlation between Ameriguard and Liberty is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ameriguard Security Services 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 Ameriguard Security 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 Ameriguard Security Services 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 Ameriguard Security i.e., Ameriguard Security and Liberty Defense go up and down completely randomly.

Pair Corralation between Ameriguard Security and Liberty Defense

Given the investment horizon of 90 days Ameriguard Security Services is expected to generate 2.07 times more return on investment than Liberty Defense. However, Ameriguard Security is 2.07 times more volatile than Liberty Defense Holdings. It trades about 0.01 of its potential returns per unit of risk. Liberty Defense Holdings is currently generating about 0.0 per unit of risk. If you would invest  310.00  in Ameriguard Security Services on September 25, 2024 and sell it today you would lose (298.00) from holding Ameriguard Security Services or give up 96.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Ameriguard Security Services  vs.  Liberty Defense Holdings

Ameriguard Security

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ameriguard Security Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Ameriguard Security unveiled solid returns over the last few months and may actually be approaching a breakup point.

Liberty Defense Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Defense Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Liberty Defense reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ameriguard Security and Liberty Defense

The main advantage of trading using opposite Ameriguard Security and Liberty Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ameriguard Security 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.

The idea behind Ameriguard Security Services and Liberty Defense Holdings 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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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.