Correlation Between Boeing and Liberty Media

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

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

Diversification Opportunities for Boeing and Liberty Media

-0.59

Correlation Coefficient

Boeing  Liberty Media

Excellent diversification

The 3 months correlation between Boeing and Liberty is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding The Boeing and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and Boeing 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 The Boeing 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 has no effect on the direction of Boeing i.e., Boeing and Liberty Media go up and down completely randomly.

Pair Corralation between Boeing and Liberty Media

Allowing for the 90-day total investment horizon The Boeing is expected to under-perform the Liberty Media. But the stock apears to be less risky and, when comparing its historical volatility, The Boeing is 1.0 times less risky than Liberty Media. The stock trades about -0.08 of its potential returns per unit of risk. The Liberty Media is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,656  in Liberty Media on September 4, 2024 and sell it today you would lose (405.00) from holding Liberty Media or give up 15.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	76.52%
Values	Daily Returns

The Boeing  vs.  Liberty Media

Boeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Boeing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Boeing is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Liberty Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Boeing and Liberty Media

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

The idea behind The Boeing and Liberty Media 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.