Correlation Between Black Dragon and Liberty Energy

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

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

Diversification Opportunities for Black Dragon and Liberty Energy

0.0

Correlation Coefficient

Black Dragon  Liberty Energy

Pay attention - limited upside

The 3 months correlation between Black and Liberty is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Black Dragon Resource and Liberty Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Energy Corp and Black Dragon 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 Black Dragon Resource are associated (or correlated) with Liberty Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Energy Corp has no effect on the direction of Black Dragon i.e., Black Dragon and Liberty Energy go up and down completely randomly.

Pair Corralation between Black Dragon and Liberty Energy

If you would invest  0.01  in Liberty Energy Corp on September 16, 2024 and sell it today you would earn a total of  0.00  from holding Liberty Energy Corp or generate 0.0% return on investment over 90 days.

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

Black Dragon Resource  vs.  Liberty Energy Corp

Black Dragon Resource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Dragon Resource has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Black Dragon is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Liberty Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Liberty Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Dragon and Liberty Energy

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

The idea behind Black Dragon Resource and Liberty Energy Corp 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.