Correlation Between Spirent Communications and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Liberty Media Corp, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Liberty Media.
Diversification Opportunities for Spirent Communications and Liberty Media
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spirent and Liberty is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications 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 Spirent Communications 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 Spirent Communications 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 Spirent Communications i.e., Spirent Communications and Liberty Media go up and down completely randomly.
Pair Corralation between Spirent Communications and Liberty Media
Assuming the 90 days trading horizon Spirent Communications plc is expected to under-perform the Liberty Media. In addition to that, Spirent Communications is 1.72 times more volatile than Liberty Media Corp. It trades about -0.01 of its total potential returns per unit of risk. Liberty Media Corp is currently generating about 0.05 per unit of volatility. If you would invest 5,604 in Liberty Media Corp on September 3, 2024 and sell it today you would earn a total of 2,492 from holding Liberty Media Corp or generate 44.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.56% |
| Values | Daily Returns |
Spirent Communications plc vs. Liberty Media Corp
Performance |
| Timeline |
| Spirent Communications |
| Liberty Media Corp |
Spirent Communications and Liberty Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Liberty Media
The main advantage of trading using opposite Spirent Communications and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. CVS Health Corp | Spirent Communications vs. Cardinal Health | Spirent Communications vs. Planet Fitness Cl | Spirent Communications vs. Federal Realty Investment |
| Liberty Media vs. The Mercantile Investment | Liberty Media vs. Power Metal Resources | Liberty Media vs. Capital Metals PLC | Liberty Media vs. European Metals Holdings |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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