Correlation Between Lions Gate and LiveOne
Can any of the company-specific risk be diversified away by investing in both Lions Gate and LiveOne 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 LiveOne 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 LiveOne, you can compare the effects of market volatilities on Lions Gate and LiveOne 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 LiveOne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lions Gate and LiveOne.
Diversification Opportunities for Lions Gate and LiveOne
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lions and LiveOne is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lions Gate Entertainment and LiveOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiveOne 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 LiveOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiveOne has no effect on the direction of Lions Gate i.e., Lions Gate and LiveOne go up and down completely randomly.
Pair Corralation between Lions Gate and LiveOne
Assuming the 90 days horizon Lions Gate is expected to generate 5.3 times less return on investment than LiveOne. But when comparing it to its historical volatility, Lions Gate Entertainment is 2.28 times less risky than LiveOne. It trades about 0.09 of its potential returns per unit of risk. LiveOne is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 77.00 in LiveOne on September 2, 2024 and sell it today you would earn a total of 23.00 from holding LiveOne or generate 29.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lions Gate Entertainment vs. LiveOne
Performance |
| Timeline |
| Lions Gate Entertainment |
| LiveOne |
Lions Gate and LiveOne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lions Gate and LiveOne
The main advantage of trading using opposite Lions Gate and LiveOne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lions Gate position performs unexpectedly, LiveOne 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 LiveOne will offset losses from the drop in LiveOne'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 |
| LiveOne vs. Reading International B | LiveOne vs. Marcus | LiveOne vs. Reading International | LiveOne vs. News Corp B |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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