Correlation Between Lions Gate and Hollywall Entertainment
Can any of the company-specific risk be diversified away by investing in both Lions Gate and Hollywall Entertainment 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 Hollywall Entertainment 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 Hollywall Entertainment, you can compare the effects of market volatilities on Lions Gate and Hollywall Entertainment 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 Hollywall Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lions Gate and Hollywall Entertainment.
Diversification Opportunities for Lions Gate and Hollywall Entertainment
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lions and Hollywall is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lions Gate Entertainment and Hollywall Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywall Entertainment 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 Hollywall Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywall Entertainment has no effect on the direction of Lions Gate i.e., Lions Gate and Hollywall Entertainment go up and down completely randomly.
Pair Corralation between Lions Gate and Hollywall Entertainment
Assuming the 90 days horizon Lions Gate is expected to generate 95.79 times less return on investment than Hollywall Entertainment. But when comparing it to its historical volatility, Lions Gate Entertainment is 7.42 times less risky than Hollywall Entertainment. It trades about 0.01 of its potential returns per unit of risk. Hollywall Entertainment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Hollywall Entertainment on October 24, 2024 and sell it today you would lose (12.90) from holding Hollywall Entertainment or give up 80.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lions Gate Entertainment vs. Hollywall Entertainment
Performance |
| Timeline |
| Lions Gate Entertainment |
| Hollywall Entertainment |
Lions Gate and Hollywall Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lions Gate and Hollywall Entertainment
The main advantage of trading using opposite Lions Gate and Hollywall Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lions Gate position performs unexpectedly, Hollywall Entertainment 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 Hollywall Entertainment will offset losses from the drop in Hollywall Entertainment's long position.| Lions Gate vs. Lions Gate Entertainment | Lions Gate vs. AMC Networks | Lions Gate vs. Altice USA | Lions Gate vs. Liberty Broadband Srs |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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