Correlation Between Liberty Broadband and Focus Home
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Focus Home 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 Broadband and Focus Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Focus Home Interactive, you can compare the effects of market volatilities on Liberty Broadband and Focus Home 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 Broadband with a short position of Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Focus Home.
Diversification Opportunities for Liberty Broadband and Focus Home
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Focus is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive and Liberty Broadband 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 Broadband are associated (or correlated) with Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Focus Home go up and down completely randomly.
Pair Corralation between Liberty Broadband and Focus Home
Assuming the 90 days horizon Liberty Broadband is expected to generate 5.85 times less return on investment than Focus Home. But when comparing it to its historical volatility, Liberty Broadband is 2.64 times less risky than Focus Home. It trades about 0.06 of its potential returns per unit of risk. Focus Home Interactive is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,125 in Focus Home Interactive on October 11, 2024 and sell it today you would earn a total of 170.00 from holding Focus Home Interactive or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband vs. Focus Home Interactive
Performance |
| Timeline |
| Liberty Broadband |
| Focus Home Interactive |
Liberty Broadband and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Focus Home
The main advantage of trading using opposite Liberty Broadband and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.| Liberty Broadband vs. GREENX METALS LTD | Liberty Broadband vs. JD SPORTS FASH | Liberty Broadband vs. Charter Communications | Liberty Broadband vs. TELECOM ITALIA |
| Focus Home vs. AWILCO DRILLING PLC | Focus Home vs. BORR DRILLING NEW | Focus Home vs. Neinor Homes SA | Focus Home vs. American Homes 4 |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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