Correlation Between Ooma and Liberty Global
Can any of the company-specific risk be diversified away by investing in both Ooma and Liberty Global 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 Ooma and Liberty Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ooma Inc and Liberty Global PLC, you can compare the effects of market volatilities on Ooma and Liberty Global 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 Ooma with a short position of Liberty Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ooma and Liberty Global.
Diversification Opportunities for Ooma and Liberty Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ooma and Liberty is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ooma Inc and Liberty Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Global PLC and Ooma 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 Ooma Inc are associated (or correlated) with Liberty Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Global PLC has no effect on the direction of Ooma i.e., Ooma and Liberty Global go up and down completely randomly.
Pair Corralation between Ooma and Liberty Global
Given the investment horizon of 90 days Ooma is expected to generate 1.82 times less return on investment than Liberty Global. But when comparing it to its historical volatility, Ooma Inc is 1.53 times less risky than Liberty Global. It trades about 0.34 of its potential returns per unit of risk. Liberty Global PLC is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 1,062 in Liberty Global PLC on August 30, 2024 and sell it today you would earn a total of 337.00 from holding Liberty Global PLC or generate 31.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ooma Inc vs. Liberty Global PLC
Performance |
| Timeline |
| Ooma Inc |
| Liberty Global PLC |
Ooma and Liberty Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ooma and Liberty Global
The main advantage of trading using opposite Ooma and Liberty Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ooma position performs unexpectedly, Liberty Global 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 Global will offset losses from the drop in Liberty Global's long position.| Ooma vs. Shenandoah Telecommunications Co | Ooma vs. Anterix | Ooma vs. Liberty Broadband Corp | Ooma vs. IDT Corporation |
| Liberty Global vs. Liberty Global PLC | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Latin America | Liberty Global vs. Liberty Broadband Srs |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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