Correlation Between Liberty Broadband and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Cogent Communications 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 Cogent Communications 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 Cogent Communications Group, you can compare the effects of market volatilities on Liberty Broadband and Cogent Communications 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 Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Cogent Communications.
Diversification Opportunities for Liberty Broadband and Cogent Communications
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Liberty and Cogent is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications 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 Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Cogent Communications go up and down completely randomly.
Pair Corralation between Liberty Broadband and Cogent Communications
Assuming the 90 days horizon Liberty Broadband Srs is expected to generate 2.13 times more return on investment than Cogent Communications. However, Liberty Broadband is 2.13 times more volatile than Cogent Communications Group. It trades about 0.09 of its potential returns per unit of risk. Cogent Communications Group is currently generating about 0.06 per unit of risk. If you would invest 8,129 in Liberty Broadband Srs on August 23, 2024 and sell it today you would earn a total of 520.00 from holding Liberty Broadband Srs or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband Srs vs. Cogent Communications Group
Performance |
| Timeline |
| Liberty Broadband Srs |
| Cogent Communications |
Liberty Broadband and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Cogent Communications
The main advantage of trading using opposite Liberty Broadband and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Cogent Communications 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| Liberty Broadband vs. Cable One | Liberty Broadband vs. Liberty Broadband Corp | Liberty Broadband vs. Telkom Indonesia Tbk | Liberty Broadband vs. Liberty Global PLC |
| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Charter Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. TIM Participacoes 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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