Correlation Between Imax Corp and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Imax Corp 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 Imax Corp and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imax Corp and Liberty Media, you can compare the effects of market volatilities on Imax Corp 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 Imax Corp with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imax Corp and Liberty Media.
Diversification Opportunities for Imax Corp and Liberty Media
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Imax and Liberty is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Imax Corp and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and Imax Corp 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 Imax Corp 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 has no effect on the direction of Imax Corp i.e., Imax Corp and Liberty Media go up and down completely randomly.
Pair Corralation between Imax Corp and Liberty Media
Given the investment horizon of 90 days Imax Corp is expected to generate 2.84 times less return on investment than Liberty Media. But when comparing it to its historical volatility, Imax Corp is 2.07 times less risky than Liberty Media. It trades about 0.31 of its potential returns per unit of risk. Liberty Media is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 5,836 in Liberty Media on September 1, 2024 and sell it today you would earn a total of 1,466 from holding Liberty Media or generate 25.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imax Corp vs. Liberty Media
Performance |
| Timeline |
| Imax Corp |
| Liberty Media |
Imax Corp and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imax Corp and Liberty Media
The main advantage of trading using opposite Imax Corp and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imax Corp 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.| Imax Corp vs. ADTRAN Inc | Imax Corp vs. Belden Inc | Imax Corp vs. ADC Therapeutics SA | Imax Corp vs. Comtech Telecommunications Corp |
| Liberty Media vs. Stepstone Group | Liberty Media vs. Morgan Stanley | Liberty Media vs. SEI Investments | Liberty Media vs. Artisan Partners Asset |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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