Correlation Between Liberty Broadband and Telephone

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Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Telephone 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 Telephone 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 Telephone and Data, you can compare the effects of market volatilities on Liberty Broadband and Telephone 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 Telephone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Telephone.

Diversification Opportunities for Liberty Broadband and Telephone

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Liberty and Telephone is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Corp and Telephone and Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telephone and Data 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 Telephone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telephone and Data has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Telephone go up and down completely randomly.

Pair Corralation between Liberty Broadband and Telephone

Assuming the 90 days horizon Liberty Broadband Corp is expected to generate 0.25 times more return on investment than Telephone. However, Liberty Broadband Corp is 4.01 times less risky than Telephone. It trades about 0.02 of its potential returns per unit of risk. Telephone and Data is currently generating about -0.03 per unit of risk. If you would invest  2,390  in Liberty Broadband Corp on August 24, 2024 and sell it today you would earn a total of  5.00  from holding Liberty Broadband Corp or generate 0.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Liberty Broadband Corp  vs.  Telephone and Data

 Performance 
       Timeline  
Liberty Broadband Corp 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Liberty Broadband is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.
Telephone and Data 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Telephone may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Liberty Broadband and Telephone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Liberty Broadband and Telephone

The main advantage of trading using opposite Liberty Broadband and Telephone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Telephone 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 Telephone will offset losses from the drop in Telephone's long position.
The idea behind Liberty Broadband Corp and Telephone and Data pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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