Correlation Between Liberty Broadband and VEON

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

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

Diversification Opportunities for Liberty Broadband and VEON

0.06

Correlation Coefficient

Liberty Broadband  VEON

Significant diversification

The 3 months correlation between Liberty and VEON is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Broadband Srs and VEON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VEON and Liberty Broadband 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 Broadband Srs are associated (or correlated) with VEON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VEON has no effect on the direction of Liberty Broadband i.e., Liberty Broadband and VEON go up and down completely randomly.

Pair Corralation between Liberty Broadband and VEON

Assuming the 90 days horizon Liberty Broadband is expected to generate 14.04 times less return on investment than VEON. In addition to that, Liberty Broadband is 1.16 times more volatile than VEON. It trades about 0.01 of its total potential returns per unit of risk. VEON is currently generating about 0.16 per unit of volatility. If you would invest  3,042  in VEON on September 28, 2024 and sell it today you would earn a total of  758.00  from holding VEON or generate 24.92% return on investment over 90 days.

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

Liberty Broadband Srs  vs.  VEON

Liberty Broadband Srs

Risk-Adjusted Performance

0 of 100

Very Weak

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

VEON

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VEON are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VEON displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Broadband and VEON

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

The idea behind Liberty Broadband Srs and VEON 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.