Correlation Between Capri Holdings and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Capri Holdings 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 Capri Holdings and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Liberty Broadband, you can compare the effects of market volatilities on Capri Holdings 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 Capri Holdings with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Liberty Broadband.
Diversification Opportunities for Capri Holdings and Liberty Broadband
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capri and Liberty is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and Capri Holdings 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 Capri Holdings 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 has no effect on the direction of Capri Holdings i.e., Capri Holdings and Liberty Broadband go up and down completely randomly.
Pair Corralation between Capri Holdings and Liberty Broadband
Given the investment horizon of 90 days Capri Holdings is expected to generate 1.1 times less return on investment than Liberty Broadband. In addition to that, Capri Holdings is 1.12 times more volatile than Liberty Broadband. It trades about 0.1 of its total potential returns per unit of risk. Liberty Broadband is currently generating about 0.12 per unit of volatility. If you would invest 7,550 in Liberty Broadband on August 29, 2024 and sell it today you would earn a total of 600.00 from holding Liberty Broadband or generate 7.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Liberty Broadband
Performance |
| Timeline |
| Capri Holdings |
| Liberty Broadband |
Capri Holdings and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Liberty Broadband
The main advantage of trading using opposite Capri Holdings and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings 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.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Liberty Broadband vs. Check Point Software | Liberty Broadband vs. Global Ship Lease | Liberty Broadband vs. Sixt Leasing SE | Liberty Broadband vs. Clean Energy Fuels |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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