Correlation Between Liberty Energy and Altura Energy

Can any of the company-specific risk be diversified away by investing in both Liberty Energy and Altura 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 Altura 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 Altura Energy, you can compare the effects of market volatilities on Liberty Energy and Altura 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 Altura Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Energy and Altura Energy.

Diversification Opportunities for Liberty Energy and Altura Energy

-0.07

Correlation Coefficient

Liberty Energy  Altura Energy

Good diversification

The 3 months correlation between Liberty and Altura is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Energy Corp and Altura Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altura 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 Altura Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altura Energy has no effect on the direction of Liberty Energy i.e., Liberty Energy and Altura Energy go up and down completely randomly.

Pair Corralation between Liberty Energy and Altura Energy

Given the investment horizon of 90 days Liberty Energy Corp is expected to generate 32.28 times more return on investment than Altura Energy. However, Liberty Energy is 32.28 times more volatile than Altura Energy. It trades about 0.11 of its potential returns per unit of risk. Altura Energy is currently generating about 0.21 per unit of risk. If you would invest  0.01  in Liberty Energy Corp on September 17, 2024 and sell it today you would lose  0.00  from holding Liberty Energy Corp or give up 0.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Liberty Energy Corp  vs.  Altura Energy

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.

Altura Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Altura Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Altura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Energy and Altura Energy

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

The idea behind Liberty Energy Corp and Altura 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.