Correlation Between Liberty Media and Gray Television

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

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

Diversification Opportunities for Liberty Media and Gray Television

0.72

Correlation Coefficient

Liberty Media  Gray Television

Poor diversification

The 3 months correlation between Liberty and Gray is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Gray Television in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gray Television 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 Gray Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gray Television has no effect on the direction of Liberty Media i.e., Liberty Media and Gray Television go up and down completely randomly.

Pair Corralation between Liberty Media and Gray Television

Assuming the 90 days horizon Liberty Media is expected to generate 1.73 times less return on investment than Gray Television. But when comparing it to its historical volatility, Liberty Media is 2.75 times less risky than Gray Television. It trades about 0.16 of its potential returns per unit of risk. Gray Television is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  364.00  in Gray Television on May 7, 2025 and sell it today you would earn a total of  85.00  from holding Gray Television or generate 23.35% return on investment over 90 days.

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

Liberty Media  vs.  Gray Television

Liberty Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Liberty Media disclosed solid returns over the last few months and may actually be approaching a breakup point.

Gray Television

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gray Television are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Gray Television displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty Media and Gray Television

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

The idea behind Liberty Media and Gray Television 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.