Correlation Between Liberty Media and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Aberforth Smaller 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 Aberforth Smaller 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 Aberforth Smaller Companies, you can compare the effects of market volatilities on Liberty Media and Aberforth Smaller 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 Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Aberforth Smaller.
Diversification Opportunities for Liberty Media and Aberforth Smaller
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liberty and Aberforth is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller 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 Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of Liberty Media i.e., Liberty Media and Aberforth Smaller go up and down completely randomly.
Pair Corralation between Liberty Media and Aberforth Smaller
Assuming the 90 days trading horizon Liberty Media Corp is expected to generate 2.59 times more return on investment than Aberforth Smaller. However, Liberty Media is 2.59 times more volatile than Aberforth Smaller Companies. It trades about 0.27 of its potential returns per unit of risk. Aberforth Smaller Companies is currently generating about 0.29 per unit of risk. If you would invest 7,487 in Liberty Media Corp on September 13, 2024 and sell it today you would earn a total of 972.00 from holding Liberty Media Corp or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media Corp vs. Aberforth Smaller Companies
Performance |
| Timeline |
| Liberty Media Corp |
| Aberforth Smaller |
Liberty Media and Aberforth Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Aberforth Smaller
The main advantage of trading using opposite Liberty Media and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller's long position.| Liberty Media vs. Samsung Electronics Co | Liberty Media vs. Samsung Electronics Co | Liberty Media vs. Hyundai Motor | Liberty Media vs. Reliance Industries Ltd |
| Aberforth Smaller vs. G5 Entertainment AB | Aberforth Smaller vs. Live Nation Entertainment | Aberforth Smaller vs. DFS Furniture PLC | Aberforth Smaller vs. MediaZest plc |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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