Correlation Between Liberty Media and Fox Corp

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

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

Diversification Opportunities for Liberty Media and Fox Corp

0.29

Correlation Coefficient

Liberty Media  Fox Corp

Modest diversification

The 3 months correlation between Liberty and Fox is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Fox Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Corp Class 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 Fox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Corp Class has no effect on the direction of Liberty Media i.e., Liberty Media and Fox Corp go up and down completely randomly.

Pair Corralation between Liberty Media and Fox Corp

Assuming the 90 days horizon Liberty Media is expected to under-perform the Fox Corp. In addition to that, Liberty Media is 1.34 times more volatile than Fox Corp Class. It trades about -0.05 of its total potential returns per unit of risk. Fox Corp Class is currently generating about 0.13 per unit of volatility. If you would invest  4,584  in Fox Corp Class on December 28, 2024 and sell it today you would earn a total of  489.00  from holding Fox Corp Class or generate 10.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Liberty Media  vs.  Fox Corp Class

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 quite persistent basic indicators, Liberty Media is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Fox Corp Class

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fox Corp Class are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fox Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Liberty Media and Fox Corp

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

The idea behind Liberty Media and Fox Corp Class 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.