Correlation Between Liberty Broadband and Deutsche Lufthansa
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Deutsche Lufthansa 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 Deutsche Lufthansa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Deutsche Lufthansa AG, you can compare the effects of market volatilities on Liberty Broadband and Deutsche Lufthansa 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 Deutsche Lufthansa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Deutsche Lufthansa.
Diversification Opportunities for Liberty Broadband and Deutsche Lufthansa
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Liberty and Deutsche is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Deutsche Lufthansa AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Lufthansa 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 Deutsche Lufthansa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Lufthansa has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Deutsche Lufthansa go up and down completely randomly.
Pair Corralation between Liberty Broadband and Deutsche Lufthansa
Assuming the 90 days horizon Liberty Broadband is expected to generate 0.88 times more return on investment than Deutsche Lufthansa. However, Liberty Broadband is 1.14 times less risky than Deutsche Lufthansa. It trades about -0.04 of its potential returns per unit of risk. Deutsche Lufthansa AG is currently generating about -0.17 per unit of risk. If you would invest 7,350 in Liberty Broadband on October 21, 2024 and sell it today you would lose (100.00) from holding Liberty Broadband or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband vs. Deutsche Lufthansa AG
Performance |
| Timeline |
| Liberty Broadband |
| Deutsche Lufthansa |
Liberty Broadband and Deutsche Lufthansa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Deutsche Lufthansa
The main advantage of trading using opposite Liberty Broadband and Deutsche Lufthansa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Deutsche Lufthansa 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 Deutsche Lufthansa will offset losses from the drop in Deutsche Lufthansa's long position.| Liberty Broadband vs. SCOTT TECHNOLOGY | Liberty Broadband vs. Perseus Mining Limited | Liberty Broadband vs. ANGLO ASIAN MINING | Liberty Broadband vs. UPDATE SOFTWARE |
| Deutsche Lufthansa vs. CanSino Biologics | Deutsche Lufthansa vs. FIRST SHIP LEASE | Deutsche Lufthansa vs. Pembina Pipeline Corp | Deutsche Lufthansa vs. LOANDEPOT INC A |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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