Correlation Between Fluent and Liberty Broadband

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

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

Diversification Opportunities for Fluent and Liberty Broadband

0.76

Correlation Coefficient

Fluent  Liberty Broadband

Poor diversification

The 3 months correlation between Fluent and Liberty is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Liberty Broadband Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Srs and Fluent 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 Fluent Inc are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Srs has no effect on the direction of Fluent i.e., Fluent and Liberty Broadband go up and down completely randomly.

Pair Corralation between Fluent and Liberty Broadband

Given the investment horizon of 90 days Fluent Inc is expected to generate 2.16 times more return on investment than Liberty Broadband. However, Fluent is 2.16 times more volatile than Liberty Broadband Srs. It trades about 0.01 of its potential returns per unit of risk. Liberty Broadband Srs is currently generating about -0.24 per unit of risk. If you would invest  302.00  in Fluent Inc on January 31, 2024 and sell it today you would lose (2.00) from holding Fluent Inc or give up 0.66% of portfolio value over 90 days.

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

Fluent Inc  vs.  Liberty Broadband Srs

Fluent Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Liberty Broadband Srs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Broadband Srs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fluent and Liberty Broadband

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

The idea behind Fluent Inc and Liberty Broadband Srs 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.