Correlation Between LG Display and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both LG Display and Liberty Broadband 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 LG Display and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Liberty Broadband, you can compare the effects of market volatilities on LG Display and Liberty Broadband 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 LG Display with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Liberty Broadband.
Diversification Opportunities for LG Display and Liberty Broadband
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LGA and Liberty is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and LG Display 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 LG Display Co are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband has no effect on the direction of LG Display i.e., LG Display and Liberty Broadband go up and down completely randomly.
Pair Corralation between LG Display and Liberty Broadband
Assuming the 90 days horizon LG Display is expected to generate 10.84 times less return on investment than Liberty Broadband. But when comparing it to its historical volatility, LG Display Co is 1.4 times less risky than Liberty Broadband. It trades about 0.02 of its potential returns per unit of risk. Liberty Broadband is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,780 in Liberty Broadband on September 3, 2024 and sell it today you would earn a total of 3,170 from holding Liberty Broadband or generate 66.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Liberty Broadband
Performance |
| Timeline |
| LG Display |
| Liberty Broadband |
LG Display and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Liberty Broadband
The main advantage of trading using opposite LG Display and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display position performs unexpectedly, Liberty Broadband 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 Liberty Broadband will offset losses from the drop in Liberty Broadband's long position.| LG Display vs. Apple Inc | LG Display vs. Samsung Electronics Co | LG Display vs. Samsung Electronics Co | LG Display vs. Xiaomi |
| Liberty Broadband vs. STRAYER EDUCATION | Liberty Broadband vs. CARSALESCOM | Liberty Broadband vs. Grand Canyon Education | Liberty Broadband vs. CHINA TONTINE WINES |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |