Correlation Between Bill and Liberty Northwest

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

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

Diversification Opportunities for Bill and Liberty Northwest

-0.2

Correlation Coefficient

Bill  Liberty Northwest

Good diversification

The 3 months correlation between Bill and Liberty is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and Liberty Northwest Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Northwest Bancorp and Bill 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 Bill Com Holdings are associated (or correlated) with Liberty Northwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Northwest Bancorp has no effect on the direction of Bill i.e., Bill and Liberty Northwest go up and down completely randomly.

Pair Corralation between Bill and Liberty Northwest

Given the investment horizon of 90 days Bill Com Holdings is expected to generate 1.12 times more return on investment than Liberty Northwest. However, Bill is 1.12 times more volatile than Liberty Northwest Bancorp. It trades about 0.13 of its potential returns per unit of risk. Liberty Northwest Bancorp is currently generating about 0.03 per unit of risk. If you would invest  8,704  in Bill Com Holdings on October 25, 2024 and sell it today you would earn a total of  485.00  from holding Bill Com Holdings or generate 5.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Bill Com Holdings  vs.  Liberty Northwest Bancorp

Bill Com Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Liberty Northwest Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Northwest Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Liberty Northwest is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bill and Liberty Northwest

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

The idea behind Bill Com Holdings and Liberty Northwest Bancorp 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.