Correlation Between TR Property and Liberty Media

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

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

Diversification Opportunities for TR Property and Liberty Media

0.56

Correlation Coefficient

TR Property  Liberty Media

Very weak diversification

The 3 months correlation between TRY and Liberty is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding TR Property Investment and Liberty Media Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media Corp and TR Property 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 TR Property Investment are associated (or correlated) with Liberty Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Media Corp has no effect on the direction of TR Property i.e., TR Property and Liberty Media go up and down completely randomly.

Pair Corralation between TR Property and Liberty Media

Assuming the 90 days trading horizon TR Property Investment is expected to generate 0.69 times more return on investment than Liberty Media. However, TR Property Investment is 1.45 times less risky than Liberty Media. It trades about -0.04 of its potential returns per unit of risk. Liberty Media Corp is currently generating about -0.05 per unit of risk. If you would invest  31,000  in TR Property Investment on December 30, 2024 and sell it today you would lose (1,250) from holding TR Property Investment or give up 4.03% of portfolio value over 90 days.

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

TR Property Investment  vs.  Liberty Media Corp

TR Property Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Liberty Media Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liberty Media Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Liberty Media is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TR Property and Liberty Media

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

The idea behind TR Property Investment and Liberty Media 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.