Correlation Between Liberty Broadband and Global X

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

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

Diversification Opportunities for Liberty Broadband and Global X

0.51

Correlation Coefficient

Liberty Broadband  Global X

Very weak diversification

The 3 months correlation between Liberty and Global is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds and Liberty Broadband 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 Broadband are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Global X go up and down completely randomly.

Pair Corralation between Liberty Broadband and Global X

Assuming the 90 days trading horizon Liberty Broadband is expected to under-perform the Global X. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Broadband is 1.15 times less risky than Global X. The stock trades about -0.13 of its potential returns per unit of risk. The Global X Funds is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  5,075  in Global X Funds on October 11, 2024 and sell it today you would lose (190.00) from holding Global X Funds or give up 3.74% of portfolio value over 90 days.

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

Liberty Broadband  vs.  Global X Funds

Liberty Broadband

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Liberty Broadband may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Global X Funds

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Liberty Broadband and Global X

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

The idea behind Liberty Broadband and Global X Funds 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..