Correlation Between Liberty Media and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Cleveland Cliffs 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 Cleveland Cliffs 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 Cleveland Cliffs, you can compare the effects of market volatilities on Liberty Media and Cleveland Cliffs 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 Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Cleveland Cliffs.
Diversification Opportunities for Liberty Media and Cleveland Cliffs
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Liberty and Cleveland is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs 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 Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of Liberty Media i.e., Liberty Media and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between Liberty Media and Cleveland Cliffs
Assuming the 90 days trading horizon Liberty Media Corp is expected to under-perform the Cleveland Cliffs. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Media Corp is 2.67 times less risky than Cleveland Cliffs. The stock trades about -0.19 of its potential returns per unit of risk. The Cleveland Cliffs is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 939.00 in Cleveland Cliffs on October 23, 2024 and sell it today you would earn a total of 79.00 from holding Cleveland Cliffs or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media Corp vs. Cleveland Cliffs
Performance |
| Timeline |
| Liberty Media Corp |
| Cleveland Cliffs |
Liberty Media and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Cleveland Cliffs
The main advantage of trading using opposite Liberty Media and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.| Liberty Media vs. Home Depot | Liberty Media vs. Weiss Korea Opportunity | Liberty Media vs. River and Mercantile | Liberty Media vs. Chrysalis Investments |
| Cleveland Cliffs vs. Europa Metals | Cleveland Cliffs vs. Live Nation Entertainment | Cleveland Cliffs vs. Flutter Entertainment PLC | Cleveland Cliffs vs. Zinc Media Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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