Correlation Between Fortescue Metals and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Fortescue Metals 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 Fortescue Metals and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortescue Metals Group and Liberty Broadband, you can compare the effects of market volatilities on Fortescue Metals 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 Fortescue Metals with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortescue Metals and Liberty Broadband.
Diversification Opportunities for Fortescue Metals and Liberty Broadband
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortescue and Liberty is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Fortescue Metals Group and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and Fortescue Metals 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 Fortescue Metals Group 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 Fortescue Metals i.e., Fortescue Metals and Liberty Broadband go up and down completely randomly.
Pair Corralation between Fortescue Metals and Liberty Broadband
Assuming the 90 days horizon Fortescue Metals Group is expected to generate 0.8 times more return on investment than Liberty Broadband. However, Fortescue Metals Group is 1.25 times less risky than Liberty Broadband. It trades about 0.01 of its potential returns per unit of risk. Liberty Broadband is currently generating about 0.0 per unit of risk. If you would invest 1,080 in Fortescue Metals Group on October 13, 2024 and sell it today you would earn a total of 4.00 from holding Fortescue Metals Group or generate 0.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortescue Metals Group vs. Liberty Broadband
Performance |
| Timeline |
| Fortescue Metals |
| Liberty Broadband |
Fortescue Metals and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortescue Metals and Liberty Broadband
The main advantage of trading using opposite Fortescue Metals and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortescue Metals 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.| Fortescue Metals vs. MidCap Financial Investment | Fortescue Metals vs. JLF INVESTMENT | Fortescue Metals vs. Apollo Investment Corp | Fortescue Metals vs. Cars Inc |
| Liberty Broadband vs. Nippon Light Metal | Liberty Broadband vs. Fortescue Metals Group | Liberty Broadband vs. Media and Games | Liberty Broadband vs. Forsys Metals Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |