Correlation Between Liberty Broadband and Cincinnati Financial
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Cincinnati Financial 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 Cincinnati Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Cincinnati Financial, you can compare the effects of market volatilities on Liberty Broadband and Cincinnati Financial 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 Cincinnati Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Cincinnati Financial.
Diversification Opportunities for Liberty Broadband and Cincinnati Financial
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Cincinnati is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Cincinnati Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cincinnati Financial 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 Cincinnati Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cincinnati Financial has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Cincinnati Financial go up and down completely randomly.
Pair Corralation between Liberty Broadband and Cincinnati Financial
Assuming the 90 days horizon Liberty Broadband is expected to generate 1.85 times less return on investment than Cincinnati Financial. In addition to that, Liberty Broadband is 2.09 times more volatile than Cincinnati Financial. It trades about 0.08 of its total potential returns per unit of risk. Cincinnati Financial is currently generating about 0.32 per unit of volatility. If you would invest 13,185 in Cincinnati Financial on September 1, 2024 and sell it today you would earn a total of 2,025 from holding Cincinnati Financial or generate 15.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Liberty Broadband vs. Cincinnati Financial
Performance |
| Timeline |
| Liberty Broadband |
| Cincinnati Financial |
Liberty Broadband and Cincinnati Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Cincinnati Financial
The main advantage of trading using opposite Liberty Broadband and Cincinnati Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Cincinnati Financial 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 Cincinnati Financial will offset losses from the drop in Cincinnati Financial's long position.| Liberty Broadband vs. Liberty Broadband | Liberty Broadband vs. Superior Plus Corp | Liberty Broadband vs. NMI Holdings | Liberty Broadband vs. Origin Agritech |
| Cincinnati Financial vs. ANTA SPORTS PRODUCT | Cincinnati Financial vs. Charter Communications | Cincinnati Financial vs. Cogent Communications Holdings | Cincinnati Financial vs. Liberty Broadband |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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