Correlation Between Liberty Latin and IHeartMedia
Can any of the company-specific risk be diversified away by investing in both Liberty Latin and IHeartMedia 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 Latin and IHeartMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Latin America and iHeartMedia Class A, you can compare the effects of market volatilities on Liberty Latin and IHeartMedia 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 Latin with a short position of IHeartMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Latin and IHeartMedia.
Diversification Opportunities for Liberty Latin and IHeartMedia
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liberty and IHeartMedia is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Latin America and iHeartMedia Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iHeartMedia Class and Liberty Latin 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 Latin America are associated (or correlated) with IHeartMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iHeartMedia Class has no effect on the direction of Liberty Latin i.e., Liberty Latin and IHeartMedia go up and down completely randomly.
Pair Corralation between Liberty Latin and IHeartMedia
Assuming the 90 days horizon Liberty Latin America is expected to under-perform the IHeartMedia. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Latin America is 1.51 times less risky than IHeartMedia. The stock trades about -0.14 of its potential returns per unit of risk. The iHeartMedia Class A is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 185.00 in iHeartMedia Class A on August 30, 2024 and sell it today you would earn a total of 43.00 from holding iHeartMedia Class A or generate 23.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Liberty Latin America vs. iHeartMedia Class A
Performance |
| Timeline |
| Liberty Latin America |
| iHeartMedia Class |
Liberty Latin and IHeartMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Latin and IHeartMedia
The main advantage of trading using opposite Liberty Latin and IHeartMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Latin position performs unexpectedly, IHeartMedia 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 IHeartMedia will offset losses from the drop in IHeartMedia's long position.| Liberty Latin vs. Liberty Global PLC | Liberty Latin vs. Liberty Global PLC | Liberty Latin vs. Liberty Broadband Srs | Liberty Latin vs. Shenandoah Telecommunications Co |
| IHeartMedia vs. Beasley Broadcast Group | IHeartMedia vs. Saga Communications | IHeartMedia vs. E W Scripps | IHeartMedia vs. Gray Television |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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