Correlation Between IDT and Liberty Global
Can any of the company-specific risk be diversified away by investing in both IDT and Liberty Global 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 IDT and Liberty Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDT Corporation and Liberty Global PLC, you can compare the effects of market volatilities on IDT and Liberty Global 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 IDT with a short position of Liberty Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDT and Liberty Global.
Diversification Opportunities for IDT and Liberty Global
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IDT and Liberty is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding IDT Corp. and Liberty Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Global PLC and IDT 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 IDT Corporation are associated (or correlated) with Liberty Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Global PLC has no effect on the direction of IDT i.e., IDT and Liberty Global go up and down completely randomly.
Pair Corralation between IDT and Liberty Global
Considering the 90-day investment horizon IDT Corporation is expected to generate 1.12 times more return on investment than Liberty Global. However, IDT is 1.12 times more volatile than Liberty Global PLC. It trades about 0.06 of its potential returns per unit of risk. Liberty Global PLC is currently generating about 0.04 per unit of risk. If you would invest 2,988 in IDT Corporation on August 27, 2024 and sell it today you would earn a total of 2,131 from holding IDT Corporation or generate 71.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IDT Corp. vs. Liberty Global PLC
Performance |
| Timeline |
| IDT Corporation |
| Liberty Global PLC |
IDT and Liberty Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDT and Liberty Global
The main advantage of trading using opposite IDT and Liberty Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDT position performs unexpectedly, Liberty Global 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 Global will offset losses from the drop in Liberty Global's long position.The idea behind IDT Corporation and Liberty Global PLC 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 Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Broadband Srs |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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