Correlation Between Liberty Broadband and Lowes Companies
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Lowes Companies 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 Lowes Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Lowes Companies, you can compare the effects of market volatilities on Liberty Broadband and Lowes Companies 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 Lowes Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Lowes Companies.
Diversification Opportunities for Liberty Broadband and Lowes Companies
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Lowes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Lowes Companies go up and down completely randomly.
Pair Corralation between Liberty Broadband and Lowes Companies
Assuming the 90 days horizon Liberty Broadband is expected to under-perform the Lowes Companies. In addition to that, Liberty Broadband is 1.26 times more volatile than Lowes Companies. It trades about -0.32 of its total potential returns per unit of risk. Lowes Companies is currently generating about 0.09 per unit of volatility. If you would invest 25,255 in Lowes Companies on September 12, 2024 and sell it today you would earn a total of 835.00 from holding Lowes Companies or generate 3.31% 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. Lowes Companies
Performance |
| Timeline |
| Liberty Broadband |
| Lowes Companies |
Liberty Broadband and Lowes Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Lowes Companies
The main advantage of trading using opposite Liberty Broadband and Lowes Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Lowes Companies 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 Lowes Companies will offset losses from the drop in Lowes Companies' long position.| Liberty Broadband vs. Comcast | Liberty Broadband vs. WideOpenWest | Liberty Broadband vs. Superior Plus Corp | Liberty Broadband vs. NMI Holdings |
| Lowes Companies vs. Sumitomo Rubber Industries | Lowes Companies vs. Vulcan Materials | Lowes Companies vs. LION ONE METALS | Lowes Companies vs. APPLIED MATERIALS |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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