Correlation Between John Wiley and Liberty Broadband

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

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

Diversification Opportunities for John Wiley and Liberty Broadband

-0.78

Correlation Coefficient

John Wiley  Liberty Broadband

Pay attention - limited upside

The 3 months correlation between John and Liberty is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding John Wiley Sons 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 John Wiley 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 John Wiley Sons 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 John Wiley i.e., John Wiley and Liberty Broadband go up and down completely randomly.

Pair Corralation between John Wiley and Liberty Broadband

Given the investment horizon of 90 days John Wiley Sons is expected to generate 0.81 times more return on investment than Liberty Broadband. However, John Wiley Sons is 1.23 times less risky than Liberty Broadband. It trades about 0.16 of its potential returns per unit of risk. Liberty Broadband Srs is currently generating about -0.2 per unit of risk. If you would invest  3,098  in John Wiley Sons on January 31, 2024 and sell it today you would earn a total of  702.00  from holding John Wiley Sons or generate 22.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	78.05%
Values	Daily Returns

John Wiley Sons  vs.  Liberty Broadband Srs

John Wiley Sons

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Wiley Sons are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, John Wiley sustained solid returns over the last few months and may actually be approaching a breakup point.

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 John Wiley and Liberty Broadband

The main advantage of trading using opposite John Wiley and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Wiley 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 John Wiley Sons 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.