Correlation Between Liberty Broadband and Grupo Media

Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and Grupo 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 Liberty Broadband and Grupo Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Liberty Broadband and Grupo Media Capital, you can compare the effects of market volatilities on Liberty Broadband and Grupo 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 Liberty Broadband with a short position of Grupo Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and Grupo Media.

Diversification Opportunities for Liberty Broadband and Grupo Media

0.21

Correlation Coefficient

Liberty Broadband  Grupo Media

Modest diversification

The 3 months correlation between Liberty and Grupo is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Grupo Media Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Media Capital and Liberty Broadband 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 Liberty Broadband are associated (or correlated) with Grupo Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Media Capital has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Grupo Media go up and down completely randomly.

Pair Corralation between Liberty Broadband and Grupo Media

If you would invest  7,400  in Liberty Broadband on October 24, 2024 and sell it today you would lose (100.00) from holding Liberty Broadband or give up 1.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Liberty Broadband  vs.  Grupo Media Capital

Liberty Broadband

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Broadband has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Liberty Broadband is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Grupo Media Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Media Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grupo Media is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Liberty Broadband and Grupo Media

The main advantage of trading using opposite Liberty Broadband and Grupo Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Broadband position performs unexpectedly, Grupo 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 Grupo Media will offset losses from the drop in Grupo Media's long position.

The idea behind Liberty Broadband and Grupo Media Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.