Correlation Between Liberty Energy and Magellan Energy

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

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

Diversification Opportunities for Liberty Energy and Magellan Energy

-0.32

Correlation Coefficient

Liberty Energy  Magellan Energy

Very good diversification

The 3 months correlation between Liberty and Magellan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Energy Corp and Magellan Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magellan Energy and Liberty Energy 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 Energy Corp are associated (or correlated) with Magellan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magellan Energy has no effect on the direction of Liberty Energy i.e., Liberty Energy and Magellan Energy go up and down completely randomly.

Pair Corralation between Liberty Energy and Magellan Energy

If you would invest  0.00  in Magellan Energy on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Magellan Energy or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Liberty Energy Corp  vs.  Magellan Energy

Liberty Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Liberty Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Magellan Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magellan Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, Magellan Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Energy and Magellan Energy

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

The idea behind Liberty Energy Corp and Magellan Energy 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.