Correlation Between ADTRAN and Liberty Media
Can any of the company-specific risk be diversified away by investing in both ADTRAN and Liberty Media 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 ADTRAN and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADTRAN Inc and Liberty Media, you can compare the effects of market volatilities on ADTRAN and Liberty Media 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 ADTRAN with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADTRAN and Liberty Media.
Diversification Opportunities for ADTRAN and Liberty Media
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ADTRAN and Liberty is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding ADTRAN Inc and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and ADTRAN 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 ADTRAN Inc are associated (or correlated) with Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media has no effect on the direction of ADTRAN i.e., ADTRAN and Liberty Media go up and down completely randomly.
Pair Corralation between ADTRAN and Liberty Media
Given the investment horizon of 90 days ADTRAN Inc is expected to generate 2.09 times more return on investment than Liberty Media. However, ADTRAN is 2.09 times more volatile than Liberty Media. It trades about 0.23 of its potential returns per unit of risk. Liberty Media is currently generating about 0.17 per unit of risk. If you would invest 593.00 in ADTRAN Inc on August 30, 2024 and sell it today you would earn a total of 246.00 from holding ADTRAN Inc or generate 41.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADTRAN Inc vs. Liberty Media
Performance |
| Timeline |
| ADTRAN Inc |
| Liberty Media |
ADTRAN and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADTRAN and Liberty Media
The main advantage of trading using opposite ADTRAN and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADTRAN position performs unexpectedly, Liberty Media 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 Liberty Media will offset losses from the drop in Liberty Media's long position.| ADTRAN vs. Mynaric AG ADR | ADTRAN vs. KVH Industries | ADTRAN vs. Telesat Corp | ADTRAN vs. Digi International |
| Liberty Media vs. Liberty Media | Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. News Corp B | Liberty Media vs. News Corp 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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