Correlation Between Liberty Media and Liberty Global
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Liberty Global 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 Media and Liberty Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Liberty Global PLC, you can compare the effects of market volatilities on Liberty Media and Liberty Global 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 Media with a short position of Liberty Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Liberty Global.
Diversification Opportunities for Liberty Media and Liberty Global
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Liberty is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Liberty Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Global PLC and Liberty Media 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 Media are associated (or correlated) with Liberty Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Global PLC has no effect on the direction of Liberty Media i.e., Liberty Media and Liberty Global go up and down completely randomly.
Pair Corralation between Liberty Media and Liberty Global
Assuming the 90 days horizon Liberty Media is expected to under-perform the Liberty Global. In addition to that, Liberty Media is 1.05 times more volatile than Liberty Global PLC. It trades about -0.26 of its total potential returns per unit of risk. Liberty Global PLC is currently generating about 0.01 per unit of volatility. If you would invest 1,777 in Liberty Global PLC on March 7, 2024 and sell it today you would earn a total of 6.00 from holding Liberty Global PLC or generate 0.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Liberty Media vs. Liberty Global PLC
Performance |
Timeline |
Liberty Media |
Liberty Global PLC |
Liberty Media and Liberty Global Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Liberty Media and Liberty Global
The main advantage of trading using opposite Liberty Media and Liberty Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Liberty Global 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 Global will offset losses from the drop in Liberty Global's long position.Liberty Media vs. News Corp B | Liberty Media vs. Marcus | Liberty Media vs. Madison Square Garden | Liberty Media vs. Atlanta Braves Holdings |
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Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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