Correlation Between LG Electronics and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both LG Electronics 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 Electronics 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 Electronics and Liberty Broadband, you can compare the effects of market volatilities on LG Electronics 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 Electronics with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Electronics and Liberty Broadband.
Diversification Opportunities for LG Electronics and Liberty Broadband
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LGLG and Liberty is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding LG Electronics and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and LG Electronics 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 Electronics 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 Electronics i.e., LG Electronics and Liberty Broadband go up and down completely randomly.
Pair Corralation between LG Electronics and Liberty Broadband
Assuming the 90 days trading horizon LG Electronics is expected to generate 0.92 times more return on investment than Liberty Broadband. However, LG Electronics is 1.08 times less risky than Liberty Broadband. It trades about -0.04 of its potential returns per unit of risk. Liberty Broadband is currently generating about -0.08 per unit of risk. If you would invest 1,340 in LG Electronics on November 6, 2024 and sell it today you would lose (30.00) from holding LG Electronics or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
LG Electronics vs. Liberty Broadband
Performance |
| Timeline |
| LG Electronics |
| Liberty Broadband |
LG Electronics and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Electronics and Liberty Broadband
The main advantage of trading using opposite LG Electronics and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Electronics 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 Electronics vs. PLAYTIKA HOLDING DL 01 | LG Electronics vs. Goosehead Insurance | LG Electronics vs. PLAY2CHILL SA ZY | LG Electronics vs. InPlay Oil Corp |
| Liberty Broadband vs. MidCap Financial Investment | Liberty Broadband vs. PennantPark Investment | Liberty Broadband vs. CarsalesCom | Liberty Broadband vs. MGIC 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |