Correlation Between Liberty Broadband and Lamar Advertising
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Lamar Advertising 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 Lamar Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Lamar Advertising, you can compare the effects of market volatilities on Liberty Broadband and Lamar Advertising 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 Lamar Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Lamar Advertising.
Diversification Opportunities for Liberty Broadband and Lamar Advertising
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Lamar is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Lamar Advertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lamar Advertising 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 Lamar Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lamar Advertising has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Lamar Advertising go up and down completely randomly.
Pair Corralation between Liberty Broadband and Lamar Advertising
Assuming the 90 days horizon Liberty Broadband is expected to generate 2.4 times more return on investment than Lamar Advertising. However, Liberty Broadband is 2.4 times more volatile than Lamar Advertising. It trades about 0.1 of its potential returns per unit of risk. Lamar Advertising is currently generating about 0.11 per unit of risk. If you would invest 7,350 in Liberty Broadband on September 2, 2024 and sell it today you would earn a total of 600.00 from holding Liberty Broadband or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband vs. Lamar Advertising
Performance |
| Timeline |
| Liberty Broadband |
| Lamar Advertising |
Liberty Broadband and Lamar Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Lamar Advertising
The main advantage of trading using opposite Liberty Broadband and Lamar Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Lamar Advertising 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 Lamar Advertising will offset losses from the drop in Lamar Advertising's long position.| Liberty Broadband vs. China BlueChemical | Liberty Broadband vs. KINGBOARD CHEMICAL | Liberty Broadband vs. LION ONE METALS | Liberty Broadband vs. Harmony Gold Mining |
| Lamar Advertising vs. Nishi Nippon Railroad Co | Lamar Advertising vs. Liberty Broadband | Lamar Advertising vs. NXP Semiconductors NV | Lamar Advertising vs. MINCO SILVER |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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