Correlation Between Fortune Brands and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Liberty Media 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 Fortune Brands and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Brands Home and Liberty Media Corp, you can compare the effects of market volatilities on Fortune Brands and Liberty Media 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 Fortune Brands with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Liberty Media.
Diversification Opportunities for Fortune Brands and Liberty Media
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fortune and Liberty is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Home and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp and Fortune Brands 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 Fortune Brands Home are associated (or correlated) with Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of Fortune Brands i.e., Fortune Brands and Liberty Media go up and down completely randomly.
Pair Corralation between Fortune Brands and Liberty Media
Assuming the 90 days trading horizon Fortune Brands Home is expected to generate 2.2 times more return on investment than Liberty Media. However, Fortune Brands is 2.2 times more volatile than Liberty Media Corp. It trades about 0.3 of its potential returns per unit of risk. Liberty Media Corp is currently generating about -0.19 per unit of risk. If you would invest 6,966 in Fortune Brands Home on October 24, 2024 and sell it today you would earn a total of 463.00 from holding Fortune Brands Home or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 60.0% |
| Values | Daily Returns |
Fortune Brands Home vs. Liberty Media Corp
Performance |
| Timeline |
| Fortune Brands Home |
| Liberty Media Corp |
Fortune Brands and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortune Brands and Liberty Media
The main advantage of trading using opposite Fortune Brands and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Liberty Media 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 Media will offset losses from the drop in Liberty Media's long position.| Fortune Brands vs. Beazer Homes USA | Fortune Brands vs. National Beverage Corp | Fortune Brands vs. LPKF Laser Electronics | Fortune Brands vs. Martin Marietta Materials |
| Liberty Media vs. Fonix Mobile plc | Liberty Media vs. Fortune Brands Home | Liberty Media vs. Gamma Communications PLC | Liberty Media vs. Infrastrutture Wireless Italiane |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |