Correlation Between Liberty Media and RTL Group
Can any of the company-specific risk be diversified away by investing in both Liberty Media and RTL Group 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 RTL Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and RTL Group SA, you can compare the effects of market volatilities on Liberty Media and RTL Group 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 RTL Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and RTL Group.
Diversification Opportunities for Liberty Media and RTL Group
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Liberty and RTL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and RTL Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RTL Group SA 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 RTL Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RTL Group SA has no effect on the direction of Liberty Media i.e., Liberty Media and RTL Group go up and down completely randomly.
Pair Corralation between Liberty Media and RTL Group
Assuming the 90 days horizon Liberty Media is expected to under-perform the RTL Group. But the stock apears to be less risky and, when comparing its historical volatility, Liberty Media is 4.81 times less risky than RTL Group. The stock trades about -0.39 of its potential returns per unit of risk. The RTL Group SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 345.00 in RTL Group SA on January 29, 2024 and sell it today you would lose (35.00) from holding RTL Group SA or give up 10.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Liberty Media vs. RTL Group SA
Performance |
Timeline |
Liberty Media |
RTL Group SA |
Liberty Media and RTL Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Liberty Media and RTL Group
The main advantage of trading using opposite Liberty Media and RTL Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, RTL Group 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 RTL Group will offset losses from the drop in RTL Group's long position.Liberty Media vs. News Corp B | Liberty Media vs. Liberty Media | Liberty Media vs. Marcus | Liberty Media vs. Madison Square Garden |
RTL Group vs. Liberty Media | RTL Group vs. Liberty Media | RTL Group vs. Liberty Media | RTL Group vs. Tegna Inc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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