Correlation Between Cable One and Liberty Global

Can any of the company-specific risk be diversified away by investing in both Cable One and Liberty Global 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 Global 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 Global PLC, you can compare the effects of market volatilities on Cable One and Liberty Global 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 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cable One and Liberty Global.

Diversification Opportunities for Cable One and Liberty Global

0.72

Correlation Coefficient

Cable One  Liberty Global

Poor diversification

The 3 months correlation between Cable and Liberty is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cable One and Liberty Global PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Global PLC 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 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Global PLC has no effect on the direction of Cable One i.e., Cable One and Liberty Global go up and down completely randomly.

Pair Corralation between Cable One and Liberty Global

Given the investment horizon of 90 days Cable One is expected to under-perform the Liberty Global. But the stock apears to be less risky and, when comparing its historical volatility, Cable One is 5.28 times less risky than Liberty Global. The stock trades about -0.3 of its potential returns per unit of risk. The Liberty Global PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,395  in Liberty Global PLC on November 28, 2024 and sell it today you would lose (287.00) from holding Liberty Global PLC or give up 20.57% of portfolio value over 90 days.

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

Cable One  vs.  Liberty Global PLC

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 March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Liberty Global PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Global PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Liberty Global sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cable One and Liberty Global

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

The idea behind Cable One and Liberty Global PLC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.