Correlation Between Liberty Broadband and Telus Corp

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

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

Diversification Opportunities for Liberty Broadband and Telus Corp

0.83

Correlation Coefficient

Liberty Broadband  Telus Corp

Very poor diversification

The 3 months correlation between Liberty and Telus is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and Telus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telus Corp 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 Srs are associated (or correlated) with Telus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telus Corp has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Telus Corp go up and down completely randomly.

Pair Corralation between Liberty Broadband and Telus Corp

Assuming the 90 days horizon Liberty Broadband is expected to generate 1.61 times less return on investment than Telus Corp. In addition to that, Liberty Broadband is 1.41 times more volatile than Telus Corp. It trades about 0.06 of its total potential returns per unit of risk. Telus Corp is currently generating about 0.14 per unit of volatility. If you would invest  1,351  in Telus Corp on December 19, 2024 and sell it today you would earn a total of  149.00  from holding Telus Corp or generate 11.03% return on investment over 90 days.

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

Liberty Broadband Srs  vs.  Telus Corp

Liberty Broadband Srs

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Srs are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Liberty Broadband may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Telus Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telus Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Telus Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Liberty Broadband and Telus Corp

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

The idea behind Liberty Broadband Srs and Telus Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.