Correlation Between Liberty Broadband and Boise Cascade
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Boise Cascade 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 Boise Cascade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Boise Cascade, you can compare the effects of market volatilities on Liberty Broadband and Boise Cascade 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 Boise Cascade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Boise Cascade.
Diversification Opportunities for Liberty Broadband and Boise Cascade
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Boise is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Boise Cascade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boise Cascade 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 Boise Cascade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boise Cascade has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Boise Cascade go up and down completely randomly.
Pair Corralation between Liberty Broadband and Boise Cascade
Assuming the 90 days horizon Liberty Broadband is expected to generate 1.69 times more return on investment than Boise Cascade. However, Liberty Broadband is 1.69 times more volatile than Boise Cascade. It trades about 0.15 of its potential returns per unit of risk. Boise Cascade is currently generating about 0.09 per unit of risk. If you would invest 5,500 in Liberty Broadband on September 2, 2024 and sell it today you would earn a total of 2,450 from holding Liberty Broadband or generate 44.55% 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. Boise Cascade
Performance |
| Timeline |
| Liberty Broadband |
| Boise Cascade |
Liberty Broadband and Boise Cascade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Boise Cascade
The main advantage of trading using opposite Liberty Broadband and Boise Cascade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Boise Cascade 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 Boise Cascade will offset losses from the drop in Boise Cascade'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 |
| Boise Cascade vs. TITANIUM TRANSPORTGROUP | Boise Cascade vs. Entravision Communications | Boise Cascade vs. Liberty Broadband | Boise Cascade vs. TEXAS ROADHOUSE |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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