Correlation Between Liberty Broadband and Cable One
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Cable One 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 Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Broadband Srs and Cable One, you can compare the effects of market volatilities on Liberty Broadband and Cable One 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 Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Cable One.
Diversification Opportunities for Liberty Broadband and Cable One
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Cable is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One 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 Srs are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Cable One go up and down completely randomly.
Pair Corralation between Liberty Broadband and Cable One
Assuming the 90 days horizon Liberty Broadband is expected to generate 2.88 times less return on investment than Cable One. In addition to that, Liberty Broadband is 1.05 times more volatile than Cable One. It trades about 0.09 of its total potential returns per unit of risk. Cable One is currently generating about 0.27 per unit of volatility. If you would invest 34,365 in Cable One on August 26, 2024 and sell it today you would earn a total of 7,290 from holding Cable One or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband Srs vs. Cable One
Performance |
| Timeline |
| Liberty Broadband Srs |
| Cable One |
Liberty Broadband and Cable One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Cable One
The main advantage of trading using opposite Liberty Broadband and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Cable One 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 Cable One will offset losses from the drop in Cable One's long position.| Liberty Broadband vs. KT Corporation | Liberty Broadband vs. Cable One | Liberty Broadband vs. Liberty Global PLC | Liberty Broadband vs. Liberty Latin America |
| Cable One vs. Liberty Global PLC | Cable One vs. Liberty Global PLC | Cable One vs. Liberty Broadband Srs | Cable One vs. Shenandoah Telecommunications Co |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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