Correlation Between Liberty Media and Lundin Energy
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Lundin Energy 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 Media and Lundin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Lundin Energy AB, you can compare the effects of market volatilities on Liberty Media and Lundin Energy 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 Media with a short position of Lundin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Lundin Energy.
Diversification Opportunities for Liberty Media and Lundin Energy
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Liberty and Lundin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Lundin Energy AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Energy AB and Liberty Media 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 Media are associated (or correlated) with Lundin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Energy AB has no effect on the direction of Liberty Media i.e., Liberty Media and Lundin Energy go up and down completely randomly.
Pair Corralation between Liberty Media and Lundin Energy
Assuming the 90 days horizon Liberty Media is expected to generate 1.35 times more return on investment than Lundin Energy. However, Liberty Media is 1.35 times more volatile than Lundin Energy AB. It trades about 0.14 of its potential returns per unit of risk. Lundin Energy AB is currently generating about 0.13 per unit of risk. If you would invest 6,651 in Liberty Media on October 20, 2024 and sell it today you would earn a total of 172.00 from holding Liberty Media or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Liberty Media vs. Lundin Energy AB
Performance |
| Timeline |
| Liberty Media |
| Lundin Energy AB |
Liberty Media and Lundin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Lundin Energy
The main advantage of trading using opposite Liberty Media and Lundin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Lundin Energy 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 Lundin Energy will offset losses from the drop in Lundin Energy's long position.| Liberty Media vs. Space Communication | Liberty Media vs. Cheche Group Class | Liberty Media vs. Anterix | Liberty Media vs. Chemours Co |
| Lundin Energy vs. Renew Energy Global | Lundin Energy vs. Energy Vault Holdings | Lundin Energy vs. Fluence Energy | Lundin Energy vs. Advent Technologies Holdings |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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