Correlation Between Liberty Global and Ooma
Can any of the company-specific risk be diversified away by investing in both Liberty Global and Ooma 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 Global and Ooma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Global PLC and Ooma Inc, you can compare the effects of market volatilities on Liberty Global and Ooma 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 Global with a short position of Ooma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Global and Ooma.
Diversification Opportunities for Liberty Global and Ooma
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Liberty and Ooma is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Global PLC and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc and Liberty Global 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 Global PLC are associated (or correlated) with Ooma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ooma Inc has no effect on the direction of Liberty Global i.e., Liberty Global and Ooma go up and down completely randomly.
Pair Corralation between Liberty Global and Ooma
Assuming the 90 days horizon Liberty Global is expected to generate 1.84 times less return on investment than Ooma. But when comparing it to its historical volatility, Liberty Global PLC is 1.45 times less risky than Ooma. It trades about 0.02 of its potential returns per unit of risk. Ooma Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,314 in Ooma Inc on November 9, 2024 and sell it today you would earn a total of 169.00 from holding Ooma Inc or generate 12.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Global PLC vs. Ooma Inc
Performance |
| Timeline |
| Liberty Global PLC |
| Ooma Inc |
Liberty Global and Ooma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Global and Ooma
The main advantage of trading using opposite Liberty Global and Ooma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Global position performs unexpectedly, Ooma 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 Ooma will offset losses from the drop in Ooma's long position.| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Broadband Srs |
| Ooma vs. Shenandoah Telecommunications Co | Ooma vs. Anterix | Ooma vs. Liberty Broadband Corp | Ooma vs. IDT Corporation |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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