Correlation Between Liberty Broadband and Capgemini
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Capgemini 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 Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Capgemini SE, you can compare the effects of market volatilities on Liberty Broadband and Capgemini 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 Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Capgemini.
Diversification Opportunities for Liberty Broadband and Capgemini
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Liberty and Capgemini is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE 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 Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Capgemini go up and down completely randomly.
Pair Corralation between Liberty Broadband and Capgemini
Assuming the 90 days horizon Liberty Broadband is expected to generate 1.88 times more return on investment than Capgemini. However, Liberty Broadband is 1.88 times more volatile than Capgemini SE. It trades about 0.11 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.1 per unit of risk. If you would invest 4,860 in Liberty Broadband on September 3, 2024 and sell it today you would earn a total of 3,090 from holding Liberty Broadband or generate 63.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband vs. Capgemini SE
Performance |
| Timeline |
| Liberty Broadband |
| Capgemini SE |
Liberty Broadband and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Capgemini
The main advantage of trading using opposite Liberty Broadband and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Capgemini 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 Capgemini will offset losses from the drop in Capgemini's long position.| Liberty Broadband vs. STRAYER EDUCATION | Liberty Broadband vs. CARSALESCOM | Liberty Broadband vs. Grand Canyon Education | Liberty Broadband vs. CHINA TONTINE WINES |
| Capgemini vs. Fair Isaac Corp | Capgemini vs. TITANIUM TRANSPORTGROUP | Capgemini vs. Wizz Air Holdings | Capgemini 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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