Correlation Between SMA Solar and Liberty Broadband
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Liberty Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Liberty Broadband, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Liberty Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Liberty Broadband.
Diversification Opportunities for SMA Solar and Liberty Broadband
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SMA and Liberty is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Liberty Broadband go up and down completely randomly.
Pair Corralation between SMA Solar and Liberty Broadband
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Liberty Broadband. In addition to that, SMA Solar is 1.4 times more volatile than Liberty Broadband. It trades about -0.06 of its total potential returns per unit of risk. Liberty Broadband is currently generating about 0.01 per unit of volatility. If you would invest 8,550 in Liberty Broadband on September 3, 2024 and sell it today you would lose (600.00) from holding Liberty Broadband or give up 7.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Liberty Broadband
Performance |
| Timeline |
| SMA Solar Technology |
| Liberty Broadband |
SMA Solar and Liberty Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Liberty Broadband
The main advantage of trading using opposite SMA Solar and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Superior Plus Corp | SMA Solar vs. NMI Holdings | SMA Solar vs. Origin Agritech | SMA Solar vs. SIVERS SEMICONDUCTORS AB |
| Liberty Broadband vs. STRAYER EDUCATION | Liberty Broadband vs. CARSALESCOM | Liberty Broadband vs. Grand Canyon Education | Liberty Broadband vs. CHINA TONTINE WINES |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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