Correlation Between Liberty Broadband and GMO Internet
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and GMO Internet 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 GMO Internet 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 GMO Internet, you can compare the effects of market volatilities on Liberty Broadband and GMO Internet 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 GMO Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and GMO Internet.
Diversification Opportunities for Liberty Broadband and GMO Internet
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Liberty and GMO is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and GMO Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Internet 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 GMO Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Internet has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and GMO Internet go up and down completely randomly.
Pair Corralation between Liberty Broadband and GMO Internet
Assuming the 90 days horizon Liberty Broadband is expected to generate 74.27 times less return on investment than GMO Internet. But when comparing it to its historical volatility, Liberty Broadband Srs is 6.84 times less risky than GMO Internet. It trades about 0.01 of its potential returns per unit of risk. GMO Internet is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,046 in GMO Internet on September 3, 2024 and sell it today you would earn a total of 593.00 from holding GMO Internet or generate 56.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.25% |
| Values | Daily Returns |
Liberty Broadband Srs vs. GMO Internet
Performance |
| Timeline |
| Liberty Broadband Srs |
| GMO Internet |
Liberty Broadband and GMO Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and GMO Internet
The main advantage of trading using opposite Liberty Broadband and GMO Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, GMO Internet 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 GMO Internet will offset losses from the drop in GMO Internet's long position.| Liberty Broadband vs. Highway Holdings Limited | Liberty Broadband vs. QCR Holdings | Liberty Broadband vs. Partner Communications | Liberty Broadband vs. Acumen Pharmaceuticals |
| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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