Correlation Between Triton International and Liberty Northwest

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

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

Diversification Opportunities for Triton International and Liberty Northwest

-0.28

Correlation Coefficient

Triton International  Liberty Northwest

Very good diversification

The 3 months correlation between Triton and Liberty is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited 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 Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and Liberty Northwest go up and down completely randomly.

Pair Corralation between Triton International and Liberty Northwest

Assuming the 90 days trading horizon Triton International is expected to generate 1.05 times less return on investment than Liberty Northwest. But when comparing it to its historical volatility, Triton International Limited is 4.07 times less risky than Liberty Northwest. It trades about 0.12 of its potential returns per unit of risk. Liberty Northwest Bancorp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Liberty Northwest Bancorp on October 23, 2024 and sell it today you would earn a total of  5.00  from holding Liberty Northwest Bancorp or generate 0.97% return on investment over 90 days.

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

Triton International Limited  vs.  Liberty Northwest Bancorp

Triton International

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Triton International is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 Triton International and Liberty Northwest

The main advantage of trading using opposite Triton International and Liberty Northwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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 Triton International Limited 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.