Correlation Between Liberty Broadband and STMicroelectronics
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and STMicroelectronics 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 Liberty Broadband and STMicroelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband and STMicroelectronics NV, you can compare the effects of market volatilities on Liberty Broadband and STMicroelectronics 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 Liberty Broadband with a short position of STMicroelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and STMicroelectronics.
Diversification Opportunities for Liberty Broadband and STMicroelectronics
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Liberty and STMicroelectronics is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and STMicroelectronics NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STMicroelectronics and Liberty Broadband 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 Liberty Broadband are associated (or correlated) with STMicroelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STMicroelectronics has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and STMicroelectronics go up and down completely randomly.
Pair Corralation between Liberty Broadband and STMicroelectronics
Assuming the 90 days trading horizon Liberty Broadband is expected to generate 1.22 times more return on investment than STMicroelectronics. However, Liberty Broadband is 1.22 times more volatile than STMicroelectronics NV. It trades about 0.13 of its potential returns per unit of risk. STMicroelectronics NV is currently generating about -0.06 per unit of risk. If you would invest 2,072 in Liberty Broadband on October 12, 2024 and sell it today you would earn a total of 1,818 from holding Liberty Broadband or generate 87.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.46% |
| Values | Daily Returns |
Liberty Broadband vs. STMicroelectronics NV
Performance |
| Timeline |
| Liberty Broadband |
| STMicroelectronics |
Liberty Broadband and STMicroelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and STMicroelectronics
The main advantage of trading using opposite Liberty Broadband and STMicroelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, STMicroelectronics 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 STMicroelectronics will offset losses from the drop in STMicroelectronics' long position.| Liberty Broadband vs. Nordon Indstrias Metalrgicas | Liberty Broadband vs. Zebra Technologies | Liberty Broadband vs. Take Two Interactive Software | Liberty Broadband vs. Brpr Corporate Offices |
| STMicroelectronics vs. Check Point Software | STMicroelectronics vs. salesforce inc | STMicroelectronics vs. United Airlines Holdings | STMicroelectronics vs. Spotify Technology SA |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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