Correlation Between Liberty Media and Manchester United

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

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

Diversification Opportunities for Liberty Media and Manchester United

0.61

Correlation Coefficient

Liberty Media  Manchester United

Poor diversification

The 3 months correlation between Liberty and Manchester is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Manchester United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manchester United 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 Manchester United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manchester United has no effect on the direction of Liberty Media i.e., Liberty Media and Manchester United go up and down completely randomly.

Pair Corralation between Liberty Media and Manchester United

Assuming the 90 days horizon Liberty Media is expected to generate 1.02 times more return on investment than Manchester United. However, Liberty Media is 1.02 times more volatile than Manchester United. It trades about 0.17 of its potential returns per unit of risk. Manchester United is currently generating about 0.09 per unit of risk. If you would invest  7,288  in Liberty Media on September 12, 2024 and sell it today you would earn a total of  915.00  from holding Liberty Media or generate 12.55% return on investment over 90 days.

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

Liberty Media  vs.  Manchester United

Liberty Media

Risk-Adjusted Performance

12 of 100

Good

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

Manchester United

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Manchester United are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Manchester United may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Liberty Media and Manchester United

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

The idea behind Liberty Media and Manchester United 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.