Correlation Between Cable One and Liberty Broadband

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

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

Diversification Opportunities for Cable One and Liberty Broadband

-0.65

Correlation Coefficient

Cable One  Liberty Broadband

Excellent diversification

The 3 months correlation between Cable and Liberty is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cable One 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 Cable One 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 Cable One 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 Cable One i.e., Cable One and Liberty Broadband go up and down completely randomly.

Pair Corralation between Cable One and Liberty Broadband

Given the investment horizon of 90 days Cable One is expected to under-perform the Liberty Broadband. In addition to that, Cable One is 1.89 times more volatile than Liberty Broadband Srs. It trades about -0.11 of its total potential returns per unit of risk. Liberty Broadband Srs is currently generating about 0.16 per unit of volatility. If you would invest  7,424  in Liberty Broadband Srs on December 29, 2024 and sell it today you would earn a total of  1,360  from holding Liberty Broadband Srs or generate 18.32% return on investment over 90 days.

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

Cable One  vs.  Liberty Broadband Srs

Cable One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cable One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Liberty Broadband Srs

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Srs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Liberty Broadband sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cable One and Liberty Broadband

The main advantage of trading using opposite Cable One and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cable One 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 Cable One 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.