Correlation Between Liberty Media and RegalWorks Media

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

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

Diversification Opportunities for Liberty Media and RegalWorks Media

-0.16

Correlation Coefficient

Liberty Media  RegalWorks Media

Good diversification

The 3 months correlation between Liberty and RegalWorks is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and RegalWorks Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RegalWorks Media 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 RegalWorks Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RegalWorks Media has no effect on the direction of Liberty Media i.e., Liberty Media and RegalWorks Media go up and down completely randomly.

Pair Corralation between Liberty Media and RegalWorks Media

Assuming the 90 days horizon Liberty Media is expected to generate 26.3 times less return on investment than RegalWorks Media. But when comparing it to its historical volatility, Liberty Media is 8.76 times less risky than RegalWorks Media. It trades about 0.02 of its potential returns per unit of risk. RegalWorks Media is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10.00  in RegalWorks Media on January 24, 2024 and sell it today you would lose (6.60) from holding RegalWorks Media or give up 66.0% of portfolio value over 90 days.

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

Liberty Media  vs.  RegalWorks Media

Liberty Media

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 1 (%) 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 current stock price disturbance, may contribute to short-term losses for the investors.

RegalWorks Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RegalWorks Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Liberty Media and RegalWorks Media

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

The idea behind Liberty Media and RegalWorks 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.