Correlation Between Liberty Media and Hollywood Intermediate

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

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

Diversification Opportunities for Liberty Media and Hollywood Intermediate

0.0

Correlation Coefficient

Liberty Media  Hollywood Intermediate

Pay attention - limited upside

The 3 months correlation between Liberty and Hollywood is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Hollywood Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywood Intermediate 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 Hollywood Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywood Intermediate has no effect on the direction of Liberty Media i.e., Liberty Media and Hollywood Intermediate go up and down completely randomly.

Pair Corralation between Liberty Media and Hollywood Intermediate

If you would invest  9,114  in Liberty Media on October 10, 2024 and sell it today you would earn a total of  101.00  from holding Liberty Media or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Liberty Media  vs.  Hollywood Intermediate

Liberty Media

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Liberty Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hollywood Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywood Intermediate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hollywood Intermediate is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Liberty Media and Hollywood Intermediate

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

The idea behind Liberty Media and Hollywood Intermediate 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.