Correlation Between Grupo Televisa and Liberty Media

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

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

Diversification Opportunities for Grupo Televisa and Liberty Media

0.14

Correlation Coefficient

Grupo Televisa  Liberty Media

Average diversification

The 3 months correlation between Grupo and Liberty is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Televisa SAB and Liberty Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Media and Grupo Televisa 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 Grupo Televisa SAB 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 Grupo Televisa i.e., Grupo Televisa and Liberty Media go up and down completely randomly.

Pair Corralation between Grupo Televisa and Liberty Media

Assuming the 90 days horizon Grupo Televisa SAB is expected to generate 2.27 times more return on investment than Liberty Media. However, Grupo Televisa is 2.27 times more volatile than Liberty Media. It trades about 0.22 of its potential returns per unit of risk. Liberty Media is currently generating about 0.22 per unit of risk. If you would invest  57.00  in Grupo Televisa SAB on January 31, 2024 and sell it today you would earn a total of  8.00  from holding Grupo Televisa SAB or generate 14.04% return on investment over 90 days.

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

Grupo Televisa SAB  vs.  Liberty Media

Grupo Televisa SAB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Televisa SAB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Grupo Televisa reported solid returns over the last few months and may actually be approaching a breakup point.

Liberty Media

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Liberty Media is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Televisa and Liberty Media

The main advantage of trading using opposite Grupo Televisa and Liberty Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Televisa 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 Grupo Televisa SAB 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.