Correlation Between Liberty Broadband and ATT

Can any of the company-specific risk be diversified away by investing in both Liberty Broadband and ATT 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 ATT 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 ATT Inc, you can compare the effects of market volatilities on Liberty Broadband and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Broadband and ATT.

Diversification Opportunities for Liberty Broadband and ATT

-0.39

Correlation Coefficient

Liberty Broadband  ATT

Very good diversification

The 3 months correlation between Liberty and ATT is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and ATT go up and down completely randomly.

Pair Corralation between Liberty Broadband and ATT

Assuming the 90 days horizon Liberty Broadband is expected to generate 5.12 times less return on investment than ATT. In addition to that, Liberty Broadband is 4.28 times more volatile than ATT Inc. It trades about 0.0 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.07 per unit of volatility. If you would invest  2,127  in ATT Inc on September 28, 2024 and sell it today you would earn a total of  300.00  from holding ATT Inc or generate 14.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Liberty Broadband Srs  vs.  ATT Inc

Liberty Broadband Srs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Broadband Srs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Liberty Broadband is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

ATT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, ATT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Liberty Broadband and ATT

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

The idea behind Liberty Broadband Srs and ATT Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.