Correlation Between Liberty Broadband and Roku
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Roku 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 Roku into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and Roku Inc, you can compare the effects of market volatilities on Liberty Broadband and Roku 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 Roku. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Roku.
Diversification Opportunities for Liberty Broadband and Roku
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Roku is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Roku Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roku Inc 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 Roku. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roku Inc has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Roku go up and down completely randomly.
Pair Corralation between Liberty Broadband and Roku
Assuming the 90 days trading horizon Liberty Broadband is expected to generate 0.55 times more return on investment than Roku. However, Liberty Broadband is 1.81 times less risky than Roku. It trades about -0.02 of its potential returns per unit of risk. Roku Inc is currently generating about -0.01 per unit of risk. If you would invest 7,400 in Liberty Broadband on October 21, 2024 and sell it today you would lose (50.00) from holding Liberty Broadband or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband vs. Roku Inc
Performance |
| Timeline |
| Liberty Broadband |
| Roku Inc |
Liberty Broadband and Roku Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Roku
The main advantage of trading using opposite Liberty Broadband and Roku positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Roku 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 Roku will offset losses from the drop in Roku's long position.| Liberty Broadband vs. EVS Broadcast Equipment | Liberty Broadband vs. TITANIUM TRANSPORTGROUP | Liberty Broadband vs. GMO Internet | Liberty Broadband vs. Highlight Communications AG |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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