Correlation Between Liberty Media and Federal Hme
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Federal Hme 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 Federal Hme into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Federal Hme 655, you can compare the effects of market volatilities on Liberty Media and Federal Hme 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 Federal Hme. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Federal Hme.
Diversification Opportunities for Liberty Media and Federal Hme
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Liberty and Federal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Federal Hme 655 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Hme 655 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 Federal Hme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Hme 655 has no effect on the direction of Liberty Media i.e., Liberty Media and Federal Hme go up and down completely randomly.
Pair Corralation between Liberty Media and Federal Hme
Assuming the 90 days horizon Liberty Media is expected to generate 0.27 times more return on investment than Federal Hme. However, Liberty Media is 3.65 times less risky than Federal Hme. It trades about 0.53 of its potential returns per unit of risk. Federal Hme 655 is currently generating about 0.0 per unit of risk. If you would invest 7,216 in Liberty Media on November 22, 2024 and sell it today you would earn a total of 776.00 from holding Liberty Media or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media vs. Federal Hme 655
Performance |
| Timeline |
| Liberty Media |
| Federal Hme 655 |
Liberty Media and Federal Hme Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Federal Hme
The main advantage of trading using opposite Liberty Media and Federal Hme positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Federal Hme 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 Federal Hme will offset losses from the drop in Federal Hme's long position.| Liberty Media vs. Diageo PLC ADR | Liberty Media vs. Sphere Entertainment Co | Liberty Media vs. Fomento Economico Mexicano | Liberty Media vs. Academy Sports Outdoors |
| Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal Home Loan | Federal Hme vs. Federal National Mortgage |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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