Correlation Between Liberty Media and Beasley Broadcast

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

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

Diversification Opportunities for Liberty Media and Beasley Broadcast

0.12

Correlation Coefficient

Liberty Media  Beasley Broadcast

Average diversification

The 3 months correlation between Liberty and Beasley is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Beasley Broadcast Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beasley Broadcast and Liberty Media 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 Media are associated (or correlated) with Beasley Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beasley Broadcast has no effect on the direction of Liberty Media i.e., Liberty Media and Beasley Broadcast go up and down completely randomly.

Pair Corralation between Liberty Media and Beasley Broadcast

Assuming the 90 days horizon Liberty Media is expected to under-perform the Beasley Broadcast. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Media is 1.91 times less risky than Beasley Broadcast. The stock trades about -0.05 of its potential returns per unit of risk. The Beasley Broadcast Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,000  in Beasley Broadcast Group on September 14, 2024 and sell it today you would lose (1,076) from holding Beasley Broadcast Group or give up 53.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.05%
Values	Daily Returns

Liberty Media  vs.  Beasley Broadcast Group

Liberty Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liberty Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Liberty Media is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Beasley Broadcast

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beasley Broadcast Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Liberty Media and Beasley Broadcast

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

The idea behind Liberty Media and Beasley Broadcast Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.