Correlation Between Sparebank and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Sparebank 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 Sparebank and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sparebank 1 SR and Liberty Media Corp, you can compare the effects of market volatilities on Sparebank 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 Sparebank with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparebank and Liberty Media.
Diversification Opportunities for Sparebank and Liberty Media
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sparebank and Liberty is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sparebank 1 SR 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 Sparebank 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 Sparebank 1 SR 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 Sparebank i.e., Sparebank and Liberty Media go up and down completely randomly.
Pair Corralation between Sparebank and Liberty Media
Assuming the 90 days trading horizon Sparebank is expected to generate 4.37 times less return on investment than Liberty Media. But when comparing it to its historical volatility, Sparebank 1 SR is 1.51 times less risky than Liberty Media. It trades about 0.07 of its potential returns per unit of risk. Liberty Media Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sparebank 1 SR vs. Liberty Media Corp
Performance |
| Timeline |
| Sparebank 1 SR |
| Liberty Media Corp |
Sparebank and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sparebank and Liberty Media
The main advantage of trading using opposite Sparebank and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sparebank 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.| Sparebank vs. Porvair plc | Sparebank vs. GreenX Metals | Sparebank vs. Morgan Advanced Materials | Sparebank vs. Metals Exploration Plc |
| Liberty Media vs. Ashtead Technology Holdings | Liberty Media vs. MT Bank Corp | Liberty Media vs. Sparebank 1 SR | Liberty Media vs. Playtech 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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