Correlation Between Liberty Media and AFLAC
Can any of the company-specific risk be diversified away by investing in both Liberty Media and AFLAC 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 AFLAC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media Corp and AFLAC Inc, you can compare the effects of market volatilities on Liberty Media and AFLAC 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 AFLAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and AFLAC.
Diversification Opportunities for Liberty Media and AFLAC
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and AFLAC is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp and AFLAC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFLAC Inc 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 Corp are associated (or correlated) with AFLAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFLAC Inc has no effect on the direction of Liberty Media i.e., Liberty Media and AFLAC go up and down completely randomly.
Pair Corralation between Liberty Media and AFLAC
Assuming the 90 days trading horizon Liberty Media Corp is expected to generate 1.5 times more return on investment than AFLAC. However, Liberty Media is 1.5 times more volatile than AFLAC Inc. It trades about 0.21 of its potential returns per unit of risk. AFLAC Inc is currently generating about -0.15 per unit of risk. If you would invest 7,718 in Liberty Media Corp on September 14, 2024 and sell it today you would earn a total of 743.00 from holding Liberty Media Corp or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media Corp vs. AFLAC Inc
Performance |
| Timeline |
| Liberty Media Corp |
| AFLAC Inc |
Liberty Media and AFLAC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and AFLAC
The main advantage of trading using opposite Liberty Media and AFLAC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, AFLAC 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 AFLAC will offset losses from the drop in AFLAC's long position.| Liberty Media vs. Ashtead Technology Holdings | Liberty Media vs. MT Bank Corp | Liberty Media vs. Sparebank 1 SR | Liberty Media vs. Playtech Plc |
| AFLAC vs. Liberty Media Corp | AFLAC vs. Check Point Software | AFLAC vs. MediaZest plc | AFLAC vs. Centaur Media |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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