Correlation Between Liberty Latin and Liberty Latin

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

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

Diversification Opportunities for Liberty Latin and Liberty Latin

1.0

Correlation Coefficient

Liberty Latin  Liberty Latin

No risk reduction

The 3 months correlation between Liberty and Liberty is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Latin America and Liberty Latin America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty Latin America and Liberty Latin 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 Latin America are associated (or correlated) with Liberty Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty Latin America has no effect on the direction of Liberty Latin i.e., Liberty Latin and Liberty Latin go up and down completely randomly.

Pair Corralation between Liberty Latin and Liberty Latin

Given the investment horizon of 90 days Liberty Latin America is expected to generate 0.99 times more return on investment than Liberty Latin. However, Liberty Latin America is 1.01 times less risky than Liberty Latin. It trades about 0.01 of its potential returns per unit of risk. Liberty Latin America is currently generating about 0.01 per unit of risk. If you would invest  951.00  in Liberty Latin America on February 20, 2024 and sell it today you would lose (76.00) from holding Liberty Latin America or give up 7.99% of portfolio value over 90 days.

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

Liberty Latin America  vs.  Liberty Latin America

Liberty Latin America

Risk-Adjusted Performance

12 of 100

Good

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

Liberty Latin America

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Liberty Latin and Liberty Latin

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

The idea behind Liberty Latin America and Liberty Latin America 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.