Correlation Between Liberty Broadband and PLAYTECH
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and PLAYTECH 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 PLAYTECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and PLAYTECH, you can compare the effects of market volatilities on Liberty Broadband and PLAYTECH 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 PLAYTECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and PLAYTECH.
Diversification Opportunities for Liberty Broadband and PLAYTECH
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liberty and PLAYTECH is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and PLAYTECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAYTECH 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 PLAYTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAYTECH has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and PLAYTECH go up and down completely randomly.
Pair Corralation between Liberty Broadband and PLAYTECH
Assuming the 90 days horizon Liberty Broadband is expected to generate 1.21 times more return on investment than PLAYTECH. However, Liberty Broadband is 1.21 times more volatile than PLAYTECH. It trades about 0.13 of its potential returns per unit of risk. PLAYTECH is currently generating about 0.13 per unit of risk. If you would invest 4,780 in Liberty Broadband on September 3, 2024 and sell it today you would earn a total of 3,170 from holding Liberty Broadband or generate 66.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband vs. PLAYTECH
Performance |
| Timeline |
| Liberty Broadband |
| PLAYTECH |
Liberty Broadband and PLAYTECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and PLAYTECH
The main advantage of trading using opposite Liberty Broadband and PLAYTECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, PLAYTECH 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 PLAYTECH will offset losses from the drop in PLAYTECH's long position.| Liberty Broadband vs. STRAYER EDUCATION | Liberty Broadband vs. CARSALESCOM | Liberty Broadband vs. Grand Canyon Education | Liberty Broadband vs. CHINA TONTINE WINES |
| PLAYTECH vs. G III Apparel Group | PLAYTECH vs. URBAN OUTFITTERS | PLAYTECH vs. SBA Communications Corp | PLAYTECH vs. Cleanaway Waste Management |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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