Correlation Between TINC Comm and Liberty Broadband

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

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

Diversification Opportunities for TINC Comm and Liberty Broadband

-0.44

Correlation Coefficient

TINC Comm  Liberty Broadband

Very good diversification

The 3 months correlation between TINC and Liberty is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding TINC Comm VA and Liberty Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Broadband and TINC Comm 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 TINC Comm VA 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 has no effect on the direction of TINC Comm i.e., TINC Comm and Liberty Broadband go up and down completely randomly.

Pair Corralation between TINC Comm and Liberty Broadband

Assuming the 90 days horizon TINC Comm VA is expected to under-perform the Liberty Broadband. But the stock apears to be less risky and, when comparing its historical volatility, TINC Comm VA is 4.44 times less risky than Liberty Broadband. The stock trades about -0.06 of its potential returns per unit of risk. The Liberty Broadband is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,500  in Liberty Broadband on September 2, 2024 and sell it today you would earn a total of  2,450  from holding Liberty Broadband or generate 44.55% return on investment over 90 days.

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

TINC Comm VA  vs.  Liberty Broadband

TINC Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TINC Comm VA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TINC Comm is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Liberty Broadband

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Liberty Broadband reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TINC Comm and Liberty Broadband

The main advantage of trading using opposite TINC Comm and Liberty Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TINC Comm 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 TINC Comm VA and Liberty Broadband 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.