Correlation Between Gray Television and Liberty Latin

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

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

Diversification Opportunities for Gray Television and Liberty Latin

0.3

Correlation Coefficient

Gray Television  Liberty Latin

Weak diversification

The 3 months correlation between Gray and Liberty is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Gray Television and Liberty Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Latin America and Gray Television 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 Gray Television are associated (or correlated) with Liberty Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Latin America has no effect on the direction of Gray Television i.e., Gray Television and Liberty Latin go up and down completely randomly.

Pair Corralation between Gray Television and Liberty Latin

Considering the 90-day investment horizon Gray Television is expected to generate 1.61 times more return on investment than Liberty Latin. However, Gray Television is 1.61 times more volatile than Liberty Latin America. It trades about 0.18 of its potential returns per unit of risk. Liberty Latin America is currently generating about 0.02 per unit of risk. If you would invest  291.00  in Gray Television on December 28, 2024 and sell it today you would earn a total of  140.00  from holding Gray Television or generate 48.11% return on investment over 90 days.

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

Gray Television  vs.  Liberty Latin America

Gray Television

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Gray Television displayed solid returns over the last few months and may actually be approaching a breakup point.

Liberty Latin America

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Latin America are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Liberty Latin is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Gray Television and Liberty Latin

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

The idea behind Gray Television and Liberty Latin America 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.