Correlation Between Sinclair Broadcast and Liberty Media

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

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

Diversification Opportunities for Sinclair Broadcast and Liberty Media

0.63

Correlation Coefficient

Sinclair Broadcast  Liberty Media

Poor diversification

The 3 months correlation between Sinclair and Liberty is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sinclair Broadcast Group and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and Sinclair Broadcast 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 Sinclair Broadcast 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 Sinclair Broadcast i.e., Sinclair Broadcast and Liberty Media go up and down completely randomly.

Pair Corralation between Sinclair Broadcast and Liberty Media

Given the investment horizon of 90 days Sinclair Broadcast Group is expected to under-perform the Liberty Media. In addition to that, Sinclair Broadcast is 1.26 times more volatile than Liberty Media. It trades about -0.1 of its total potential returns per unit of risk. Liberty Media is currently generating about 0.25 per unit of volatility. If you would invest  7,815  in Liberty Media on September 22, 2024 and sell it today you would earn a total of  702.00  from holding Liberty Media or generate 8.98% return on investment over 90 days.

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

Sinclair Broadcast Group  vs.  Liberty Media

Sinclair Broadcast

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sinclair Broadcast Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Sinclair Broadcast demonstrated 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 uncertain basic indicators, Liberty Media sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sinclair Broadcast and Liberty Media

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

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.