Correlation Between Access Power and Liberty Broadband

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

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

Diversification Opportunities for Access Power and Liberty Broadband

0.58

Correlation Coefficient

Access Power  Liberty Broadband

Very weak diversification

The 3 months correlation between Access and Liberty is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Access Power Co and Liberty Broadband Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Srs and Access Power 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 Access Power Co 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 Srs has no effect on the direction of Access Power i.e., Access Power and Liberty Broadband go up and down completely randomly.

Pair Corralation between Access Power and Liberty Broadband

Given the investment horizon of 90 days Access Power Co is expected to generate 11.87 times more return on investment than Liberty Broadband. However, Access Power is 11.87 times more volatile than Liberty Broadband Srs. It trades about 0.17 of its potential returns per unit of risk. Liberty Broadband Srs is currently generating about 0.06 per unit of risk. If you would invest  0.09  in Access Power Co on December 20, 2024 and sell it today you would earn a total of  0.18  from holding Access Power Co or generate 200.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Access Power Co  vs.  Liberty Broadband Srs

Access Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Access Power Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Access Power reported solid returns over the last few months and may actually be approaching a breakup point.

Liberty Broadband Srs

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Srs are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Liberty Broadband may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Access Power and Liberty Broadband

The main advantage of trading using opposite Access Power and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Access Power 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.

The idea behind Access Power Co and Liberty Broadband Srs 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.