Correlation Between LiveOne and Liberty Media

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

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

Diversification Opportunities for LiveOne and Liberty Media

0.61

Correlation Coefficient

LiveOne  Liberty Media

Poor diversification

The 3 months correlation between LiveOne and Liberty is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding LiveOne and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and LiveOne 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 LiveOne 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 LiveOne i.e., LiveOne and Liberty Media go up and down completely randomly.

Pair Corralation between LiveOne and Liberty Media

Considering the 90-day investment horizon LiveOne is expected to generate 2.63 times more return on investment than Liberty Media. However, LiveOne is 2.63 times more volatile than Liberty Media. It trades about 0.31 of its potential returns per unit of risk. Liberty Media is currently generating about 0.25 per unit of risk. If you would invest  83.00  in LiveOne on September 22, 2024 and sell it today you would earn a total of  26.00  from holding LiveOne or generate 31.33% return on investment over 90 days.

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

LiveOne  vs.  Liberty Media

LiveOne

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LiveOne are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, LiveOne displayed solid returns over the last few months and may actually be approaching a breakup point.

Liberty Media

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Liberty Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LiveOne and Liberty Media

The main advantage of trading using opposite LiveOne and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiveOne 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 LiveOne and Liberty Media 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.