Correlation Between Formula One and Liberty Media
Can any of the company-specific risk be diversified away by investing in both Formula One 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 Formula One and Liberty Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formula One Group and Liberty Media, you can compare the effects of market volatilities on Formula One 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 Formula One with a short position of Liberty Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formula One and Liberty Media.
Diversification Opportunities for Formula One and Liberty Media
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Formula and Liberty is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Formula One Group and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and Formula One 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 Formula One Group 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 has no effect on the direction of Formula One i.e., Formula One and Liberty Media go up and down completely randomly.
Pair Corralation between Formula One and Liberty Media
If you would invest 7,544 in Liberty Media on September 9, 2024 and sell it today you would earn a total of 1,845 from holding Liberty Media or generate 24.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 1.54% |
Values | Daily Returns |
Formula One Group vs. Liberty Media
Performance |
Timeline |
Formula One Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Liberty Media |
Formula One and Liberty Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Formula One and Liberty Media
The main advantage of trading using opposite Formula One and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formula One 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.Formula One vs. Liberty Media | Formula One vs. Atlanta Braves Holdings, | Formula One vs. News Corp B | Formula One vs. News Corp A |
Liberty Media vs. Atlanta Braves Holdings, | Liberty Media vs. News Corp B | Liberty Media vs. News Corp A | Liberty Media vs. Atlanta Braves Holdings, |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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