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 Corp 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
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Liberty and Cogent is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Corp 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 Corp 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 is expected to generate 3.77 times less return on investment than Cogent Communications. But when comparing it to its historical volatility, Liberty Broadband Corp is 3.9 times less risky than Cogent Communications. It trades about 0.09 of its potential returns per unit of risk. Cogent Communications Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 8,063 in Cogent Communications Group on August 27, 2024 and sell it today you would earn a total of 239.00 from holding Cogent Communications Group or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Broadband Corp vs. Cogent Communications Group
Performance |
| Timeline |
| Liberty Broadband Corp |
| 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. IHS Holding | Liberty Broadband vs. InterDigital | Liberty Broadband vs. Telephone and Data | Liberty Broadband vs. Telephone and Data |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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