Correlation Between Fair Oaks and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Fair Oaks 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 Fair Oaks and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and Liberty Media Corp, you can compare the effects of market volatilities on Fair Oaks 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 Fair Oaks with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Liberty Media.
Diversification Opportunities for Fair Oaks and Liberty Media
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fair and Liberty is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp and Fair Oaks 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 Fair Oaks Income 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 Corp has no effect on the direction of Fair Oaks i.e., Fair Oaks and Liberty Media go up and down completely randomly.
Pair Corralation between Fair Oaks and Liberty Media
Assuming the 90 days trading horizon Fair Oaks is expected to generate 1.45 times less return on investment than Liberty Media. But when comparing it to its historical volatility, Fair Oaks Income is 3.57 times less risky than Liberty Media. It trades about 0.11 of its potential returns per unit of risk. Liberty Media Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,302 in Liberty Media Corp on November 6, 2024 and sell it today you would earn a total of 2,503 from holding Liberty Media Corp or generate 39.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.98% |
| Values | Daily Returns |
Fair Oaks Income vs. Liberty Media Corp
Performance |
| Timeline |
| Fair Oaks Income |
| Liberty Media Corp |
Fair Oaks and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and Liberty Media
The main advantage of trading using opposite Fair Oaks and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks 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.| Fair Oaks vs. Herald Investment Trust | Fair Oaks vs. Mobile Tornado Group | Fair Oaks vs. Cairo Communication SpA | Fair Oaks vs. Infrastrutture Wireless Italiane |
| Liberty Media vs. United States Steel | Liberty Media vs. Ruffer Investment | Liberty Media vs. Diversified Energy | Liberty Media vs. Advanced Medical Solutions |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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