Correlation Between Maxx Sports and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Maxx Sports 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 Maxx Sports and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maxx Sports TV and Liberty Media, you can compare the effects of market volatilities on Maxx Sports 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 Maxx Sports with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maxx Sports and Liberty Media.
Diversification Opportunities for Maxx Sports and Liberty Media
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Maxx and Liberty is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Maxx Sports TV and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and Maxx Sports 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 Maxx Sports TV 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 Maxx Sports i.e., Maxx Sports and Liberty Media go up and down completely randomly.
Pair Corralation between Maxx Sports and Liberty Media
Given the investment horizon of 90 days Maxx Sports TV is expected to under-perform the Liberty Media. In addition to that, Maxx Sports is 5.72 times more volatile than Liberty Media. It trades about -0.22 of its total potential returns per unit of risk. Liberty Media is currently generating about 0.19 per unit of volatility. If you would invest 7,445 in Liberty Media on August 28, 2024 and sell it today you would earn a total of 629.00 from holding Liberty Media or generate 8.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maxx Sports TV vs. Liberty Media
Performance |
| Timeline |
| Maxx Sports TV |
| Liberty Media |
Maxx Sports and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maxx Sports and Liberty Media
The main advantage of trading using opposite Maxx Sports and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maxx Sports 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.The idea behind Maxx Sports TV and Liberty Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. Madison Square Garden | 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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