Correlation Between Liberty All and Grant Park

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

By analyzing existing cross correlation between Liberty All Star and Grant Park Multi, you can compare the effects of market volatilities on Liberty All and Grant Park 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 Liberty All with a short position of Grant Park. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty All and Grant Park.

Diversification Opportunities for Liberty All and Grant Park

-0.38

Correlation Coefficient

Liberty All  Grant Park

Very good diversification

The 3 months correlation between Liberty and Grant is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Liberty All Star and Grant Park Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grant Park Multi and Liberty All 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 Liberty All Star are associated (or correlated) with Grant Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grant Park Multi has no effect on the direction of Liberty All i.e., Liberty All and Grant Park go up and down completely randomly.

Pair Corralation between Liberty All and Grant Park

Considering the 90-day investment horizon Liberty All Star is expected to generate 2.14 times more return on investment than Grant Park. However, Liberty All is 2.14 times more volatile than Grant Park Multi. It trades about 0.1 of its potential returns per unit of risk. Grant Park Multi is currently generating about 0.0 per unit of risk. If you would invest  522.00  in Liberty All Star on September 28, 2024 and sell it today you would earn a total of  61.00  from holding Liberty All Star or generate 11.69% return on investment over 90 days.

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

Liberty All Star  vs.  Grant Park Multi

Liberty All Star

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty All Star are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Liberty All is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Grant Park Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grant Park Multi has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Grant Park is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Liberty All and Grant Park

The main advantage of trading using opposite Liberty All and Grant Park positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty All position performs unexpectedly, Grant Park 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 Grant Park will offset losses from the drop in Grant Park's long position.

The idea behind Liberty All Star and Grant Park Multi 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.