Correlation Between GMS and Lionsgate Studios
Can any of the company-specific risk be diversified away by investing in both GMS and Lionsgate Studios 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 GMS and Lionsgate Studios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMS Inc and Lionsgate Studios Corp, you can compare the effects of market volatilities on GMS and Lionsgate Studios 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 GMS with a short position of Lionsgate Studios. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMS and Lionsgate Studios.
Diversification Opportunities for GMS and Lionsgate Studios
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GMS and Lionsgate is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc and Lionsgate Studios Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionsgate Studios Corp and GMS 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 GMS Inc are associated (or correlated) with Lionsgate Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionsgate Studios Corp has no effect on the direction of GMS i.e., GMS and Lionsgate Studios go up and down completely randomly.
Pair Corralation between GMS and Lionsgate Studios
Considering the 90-day investment horizon GMS Inc is expected to under-perform the Lionsgate Studios. But the stock apears to be less risky and, when comparing its historical volatility, GMS Inc is 1.42 times less risky than Lionsgate Studios. The stock trades about -0.25 of its potential returns per unit of risk. The Lionsgate Studios Corp is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 705.00 in Lionsgate Studios Corp on October 22, 2024 and sell it today you would lose (24.00) from holding Lionsgate Studios Corp or give up 3.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMS Inc vs. Lionsgate Studios Corp
Performance |
| Timeline |
| GMS Inc |
| Lionsgate Studios Corp |
GMS and Lionsgate Studios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMS and Lionsgate Studios
The main advantage of trading using opposite GMS and Lionsgate Studios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS position performs unexpectedly, Lionsgate Studios 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 Lionsgate Studios will offset losses from the drop in Lionsgate Studios' long position.| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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