Correlation Between Liberty Media and Lions Gate
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
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Liberty and Lions is 0.38. 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 0.7 times more return on investment than Lions Gate. However, Liberty Media is 1.43 times less risky than Lions Gate. It trades about 0.19 of its potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.09 per unit of risk. If you would invest 7,471 in Liberty Media on August 31, 2024 and sell it today you would earn a total of 638.00 from holding Liberty Media or generate 8.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media vs. Lions Gate Entertainment
Performance |
| Timeline |
| Liberty Media |
| Lions Gate Entertainment |
Liberty Media and Lions Gate Volatility Contrast
Predicted Return Density |
| 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.| Liberty Media vs. News Corp B | Liberty Media vs. Fox Corp Class | Liberty Media vs. AMC Networks | Liberty Media vs. Marcus |
| Lions Gate vs. Cinemark Holdings | Lions Gate vs. News Corp B | Lions Gate vs. Marcus | Lions Gate vs. Liberty Media |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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