Correlation Between Liberty Broadband and Altice USA

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

Diversification Opportunities for Liberty Broadband and Altice USA

0.8

Correlation Coefficient

Liberty Broadband  Altice USA

Very poor diversification

The 3 months correlation between Liberty and Altice is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and Altice USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altice USA 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 Altice USA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altice USA has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and Altice USA go up and down completely randomly.

Pair Corralation between Liberty Broadband and Altice USA

Assuming the 90 days horizon Liberty Broadband Srs is expected to under-perform the Altice USA. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Broadband Srs is 1.59 times less risky than Altice USA. The stock trades about -0.25 of its potential returns per unit of risk. The Altice USA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  279.00  in Altice USA on September 13, 2024 and sell it today you would lose (17.00) from holding Altice USA or give up 6.09% of portfolio value over 90 days.

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

Liberty Broadband Srs  vs.  Altice USA

Liberty Broadband Srs

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Broadband Srs are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Liberty Broadband disclosed solid returns over the last few months and may actually be approaching a breakup point.

Altice USA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altice USA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Altice USA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Broadband and Altice USA

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

The idea behind Liberty Broadband Srs and Altice USA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.