Correlation Between Liberty Latin and Saga Communications
Can any of the company-specific risk be diversified away by investing in both Liberty Latin and Saga Communications 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 Saga Communications 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 Saga Communications, you can compare the effects of market volatilities on Liberty Latin and Saga Communications 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 Saga Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Latin and Saga Communications.
Diversification Opportunities for Liberty Latin and Saga Communications
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Liberty and Saga is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Latin America and Saga Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saga Communications 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 Saga Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saga Communications has no effect on the direction of Liberty Latin i.e., Liberty Latin and Saga Communications go up and down completely randomly.
Pair Corralation between Liberty Latin and Saga Communications
Assuming the 90 days horizon Liberty Latin America is expected to under-perform the Saga Communications. In addition to that, Liberty Latin is 2.28 times more volatile than Saga Communications. It trades about -0.22 of its total potential returns per unit of risk. Saga Communications is currently generating about -0.2 per unit of volatility. If you would invest 1,459 in Saga Communications on August 30, 2024 and sell it today you would lose (161.00) from holding Saga Communications or give up 11.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Latin America vs. Saga Communications
Performance |
| Timeline |
| Liberty Latin America |
| Saga Communications |
Liberty Latin and Saga Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Latin and Saga Communications
The main advantage of trading using opposite Liberty Latin and Saga Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Latin position performs unexpectedly, Saga Communications 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 Saga Communications will offset losses from the drop in Saga Communications' 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 |
| Saga Communications vs. News Corp B | Saga Communications vs. News Corp A | Saga Communications vs. Live Nation Entertainment | Saga Communications vs. Paramount Global Class |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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