Correlation Between Lions Gate and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Lions Gate and Dow Jones 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 Lions Gate and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lions Gate Entertainment and Dow Jones Industrial, you can compare the effects of market volatilities on Lions Gate and Dow Jones 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 Lions Gate with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lions Gate and Dow Jones.
Diversification Opportunities for Lions Gate and Dow Jones
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lions and Dow is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lions Gate Entertainment and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Lions Gate 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 Lions Gate Entertainment are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Lions Gate i.e., Lions Gate and Dow Jones go up and down completely randomly.
Pair Corralation between Lions Gate and Dow Jones
Assuming the 90 days horizon Lions Gate is expected to generate 1.27 times less return on investment than Dow Jones. In addition to that, Lions Gate is 2.87 times more volatile than Dow Jones Industrial. It trades about 0.07 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lions Gate Entertainment vs. Dow Jones Industrial
Performance |
| Timeline |
Lions Gate and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Lions Gate Entertainment
Pair trading matchups for Lions Gate
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Lions Gate and Dow Jones
The main advantage of trading using opposite Lions Gate and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lions Gate position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Lions Gate vs. Lions Gate Entertainment | Lions Gate vs. AMC Networks | Lions Gate vs. Altice USA | Lions Gate vs. Liberty Broadband Srs |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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