Correlation Between Rogers Communications and Liberty Broadband

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

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

Diversification Opportunities for Rogers Communications and Liberty Broadband

0.26

Correlation Coefficient

Rogers Communications  Liberty Broadband

Modest diversification

The 3 months correlation between Rogers and Liberty is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications and Liberty Broadband Srs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband Srs and Rogers Communications 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 Rogers Communications are associated (or correlated) with Liberty Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Broadband Srs has no effect on the direction of Rogers Communications i.e., Rogers Communications and Liberty Broadband go up and down completely randomly.

Pair Corralation between Rogers Communications and Liberty Broadband

Considering the 90-day investment horizon Rogers Communications is expected to under-perform the Liberty Broadband. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 1.14 times less risky than Liberty Broadband. The stock trades about -0.38 of its potential returns per unit of risk. The Liberty Broadband Srs is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  7,827  in Liberty Broadband Srs on October 10, 2024 and sell it today you would lose (274.00) from holding Liberty Broadband Srs or give up 3.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Rogers Communications  vs.  Liberty Broadband Srs

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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.

Pair Trading with Rogers Communications and Liberty Broadband

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

The idea behind Rogers Communications and Liberty Broadband Srs 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.