Correlation Between Lundin Energy and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both Lundin Energy 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 Lundin Energy and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Energy AB and Liberty Broadband, you can compare the effects of market volatilities on Lundin Energy 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 Lundin Energy with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Energy and Liberty Broadband.
Diversification Opportunities for Lundin Energy and Liberty Broadband
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lundin and Liberty is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Energy AB and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and Lundin Energy 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 Lundin Energy AB 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 Lundin Energy i.e., Lundin Energy and Liberty Broadband go up and down completely randomly.
Pair Corralation between Lundin Energy and Liberty Broadband
Assuming the 90 days horizon Lundin Energy AB is expected to under-perform the Liberty Broadband. But the stock apears to be less risky and, when comparing its historical volatility, Lundin Energy AB is 1.38 times less risky than Liberty Broadband. The stock trades about -0.09 of its potential returns per unit of risk. The Liberty Broadband is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 7,600 in Liberty Broadband on September 1, 2024 and sell it today you would earn a total of 400.00 from holding Liberty Broadband or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lundin Energy AB vs. Liberty Broadband
Performance |
| Timeline |
| Lundin Energy AB |
| Liberty Broadband |
Lundin Energy and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Energy and Liberty Broadband
The main advantage of trading using opposite Lundin Energy and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Energy 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.| Lundin Energy vs. Air New Zealand | Lundin Energy vs. Corsair Gaming | Lundin Energy vs. Gaztransport Technigaz SA | Lundin Energy vs. Alaska Air Group |
| Liberty Broadband vs. Superior Plus Corp | Liberty Broadband vs. NMI Holdings | Liberty Broadband vs. Origin Agritech | Liberty Broadband vs. SIVERS SEMICONDUCTORS AB |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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