Correlation Between Liberty Broadband and Frontier Communications
Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Frontier 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 Frontier 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 Frontier Communications Parent, you can compare the effects of market volatilities on Liberty Broadband and Frontier 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 Frontier Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Frontier Communications.
Diversification Opportunities for Liberty Broadband and Frontier Communications
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Liberty and Frontier is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and Frontier Communications Parent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontier 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 Frontier Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontier Communications has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Frontier Communications go up and down completely randomly.
Pair Corralation between Liberty Broadband and Frontier Communications
Assuming the 90 days horizon Liberty Broadband Srs is expected to generate 0.82 times more return on investment than Frontier Communications. However, Liberty Broadband Srs is 1.22 times less risky than Frontier Communications. It trades about 0.14 of its potential returns per unit of risk. Frontier Communications Parent is currently generating about 0.09 per unit of risk. If you would invest 6,160 in Liberty Broadband Srs on August 31, 2024 and sell it today you would earn a total of 2,278 from holding Liberty Broadband Srs or generate 36.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband Srs vs. Frontier Communications Parent
Performance |
| Timeline |
| Liberty Broadband Srs |
| Frontier Communications |
Liberty Broadband and Frontier Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Broadband and Frontier Communications
The main advantage of trading using opposite Liberty Broadband and Frontier Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Frontier 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 Frontier Communications will offset losses from the drop in Frontier Communications' long position.| Liberty Broadband vs. RLJ Lodging Trust | Liberty Broadband vs. Aquagold International | Liberty Broadband vs. Stepstone Group | Liberty Broadband vs. Morningstar Unconstrained Allocation |
| Frontier Communications vs. Cable One | Frontier Communications vs. Charter Communications | Frontier Communications vs. Liberty Broadband Srs | Frontier Communications vs. ATN International |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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