Correlation Between Next PLC and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Next PLC and Liberty Media 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 Next PLC and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next PLC and Liberty Media Corp, you can compare the effects of market volatilities on Next PLC and Liberty Media 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 Next PLC with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next PLC and Liberty Media.
Diversification Opportunities for Next PLC and Liberty Media
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Next and Liberty is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Next PLC and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp and Next PLC 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 Next PLC are associated (or correlated) with Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of Next PLC i.e., Next PLC and Liberty Media go up and down completely randomly.
Pair Corralation between Next PLC and Liberty Media
Assuming the 90 days trading horizon Next PLC is expected to generate 0.79 times more return on investment than Liberty Media. However, Next PLC is 1.27 times less risky than Liberty Media. It trades about 0.08 of its potential returns per unit of risk. Liberty Media Corp is currently generating about 0.05 per unit of risk. If you would invest 698,370 in Next PLC on September 12, 2024 and sell it today you would earn a total of 273,230 from holding Next PLC or generate 39.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.44% |
| Values | Daily Returns |
Next PLC vs. Liberty Media Corp
Performance |
| Timeline |
| Next PLC |
| Liberty Media Corp |
Next PLC and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next PLC and Liberty Media
The main advantage of trading using opposite Next PLC and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next PLC position performs unexpectedly, Liberty Media 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 Media will offset losses from the drop in Liberty Media's long position.| Next PLC vs. Liberty Media Corp | Next PLC vs. Atresmedia | Next PLC vs. L3Harris Technologies | Next PLC vs. Albion Technology General |
| Liberty Media vs. Hong Kong Land | Liberty Media vs. Neometals | Liberty Media vs. Coor Service Management | Liberty Media vs. Fidelity Sustainable USD |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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