Correlation Between Liberty Media and Bolloré SE

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

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

Diversification Opportunities for Liberty Media and Bolloré SE

-0.49

Correlation Coefficient

Liberty Media  Bolloré SE

Very good diversification

The 3 months correlation between Liberty and Bolloré is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Bollor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolloré SE and Liberty Media 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 Media are associated (or correlated) with Bolloré SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolloré SE has no effect on the direction of Liberty Media i.e., Liberty Media and Bolloré SE go up and down completely randomly.

Pair Corralation between Liberty Media and Bolloré SE

Assuming the 90 days horizon Liberty Media is expected to under-perform the Bolloré SE. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Media is 1.02 times less risky than Bolloré SE. The stock trades about -0.04 of its potential returns per unit of risk. The Bollor SE is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  603.00  in Bollor SE on December 21, 2024 and sell it today you would lose (13.00) from holding Bollor SE or give up 2.16% of portfolio value over 90 days.

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

Liberty Media  vs.  Bollor SE

Liberty Media

Risk-Adjusted Performance

Very Weak

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

Bolloré SE

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Liberty Media and Bolloré SE

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

The idea behind Liberty Media and Bollor SE 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.