Correlation Between Liberty Financial and Global Health

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

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

Diversification Opportunities for Liberty Financial and Global Health

0.27

Correlation Coefficient

Liberty Financial  Global Health

Modest diversification

The 3 months correlation between Liberty and Global is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Financial Group and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health and Liberty Financial 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 Financial Group are associated (or correlated) with Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Liberty Financial i.e., Liberty Financial and Global Health go up and down completely randomly.

Pair Corralation between Liberty Financial and Global Health

If you would invest  322.00  in Liberty Financial Group on October 6, 2024 and sell it today you would earn a total of  7.00  from holding Liberty Financial Group or generate 2.17% return on investment over 90 days.

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

Liberty Financial Group  vs.  Global Health

Liberty Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Liberty Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Global Health

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Global Health is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liberty Financial and Global Health

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

The idea behind Liberty Financial Group and Global Health 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.