Correlation Between Cable One and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Cable One and Liberty Broadband 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 Cable One and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cable One and Liberty Broadband Srs, you can compare the effects of market volatilities on Cable One and Liberty Broadband 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 Cable One with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Liberty Broadband.
Diversification Opportunities for Cable One and Liberty Broadband
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cable and Liberty is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Liberty Broadband Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Srs and Cable One 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 Cable One are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Srs has no effect on the direction of Cable One i.e., Cable One and Liberty Broadband go up and down completely randomly.
Pair Corralation between Cable One and Liberty Broadband
Given the investment horizon of 90 days Cable One is expected to generate 2.18 times less return on investment than Liberty Broadband. But when comparing it to its historical volatility, Cable One is 1.43 times less risky than Liberty Broadband. It trades about 0.1 of its potential returns per unit of risk. Liberty Broadband Srs is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,213 in Liberty Broadband Srs on August 23, 2024 and sell it today you would earn a total of 2,436 from holding Liberty Broadband Srs or generate 39.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cable One vs. Liberty Broadband Srs
Performance |
| Timeline |
| Cable One |
| Liberty Broadband Srs |
Cable One and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cable One and Liberty Broadband
The main advantage of trading using opposite Cable One and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One position performs unexpectedly, Liberty Broadband 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 Broadband will offset losses from the drop in Liberty Broadband's long position.| Cable One vs. Small Cap Core | Cable One vs. FitLife Brands, Common | Cable One vs. Mutual Of America | Cable One vs. Gfl Environmental Holdings |
| Liberty Broadband vs. Cable One | Liberty Broadband vs. Liberty Broadband Corp | Liberty Broadband vs. Telkom Indonesia Tbk | Liberty Broadband vs. Liberty Global PLC |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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