Correlation Between Liberty Media and Lions Gate

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Can any of the company-specific risk be diversified away by investing in both Liberty Media and Lions Gate 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 Lions Gate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Lions Gate Entertainment, you can compare the effects of market volatilities on Liberty Media and Lions Gate 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 Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Lions Gate.

Diversification Opportunities for Liberty Media and Lions Gate

LibertyLionsDiversified AwayLibertyLionsDiversified Away100%
0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Liberty and Lions is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Lions Gate Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lions Gate Entertainment 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 Lions Gate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lions Gate Entertainment has no effect on the direction of Liberty Media i.e., Liberty Media and Lions Gate go up and down completely randomly.

Pair Corralation between Liberty Media and Lions Gate

Assuming the 90 days horizon Liberty Media is expected to generate 3.38 times less return on investment than Lions Gate. But when comparing it to its historical volatility, Liberty Media is 2.77 times less risky than Lions Gate. It trades about 0.16 of its potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  799.00  in Lions Gate Entertainment on November 20, 2024 and sell it today you would earn a total of  225.00  from holding Lions Gate Entertainment or generate 28.16% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Liberty Media  vs.  Lions Gate Entertainment

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-1001020
JavaScript chart by amCharts 3.21.15FWONA LGF-A
       Timeline  
Liberty Media 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Liberty Media are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Liberty Media sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7580859095
Lions Gate Entertainment 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Lions Gate Entertainment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lions Gate sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7.588.599.510

Liberty Media and Lions Gate Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.0-3.74-2.49-1.230.01.342.734.115.56.88 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15FWONA LGF-A
       Returns  

Pair Trading with Liberty Media and Lions Gate

The main advantage of trading using opposite Liberty Media and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Lions Gate 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 Lions Gate will offset losses from the drop in Lions Gate's long position.
The idea behind Liberty Media and Lions Gate Entertainment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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