Correlation Between Lions Gate and Warner Bros
Can any of the company-specific risk be diversified away by investing in both Lions Gate and Warner Bros 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 Warner Bros 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 Warner Bros Discovery, you can compare the effects of market volatilities on Lions Gate and Warner Bros 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 Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lions Gate and Warner Bros.
Diversification Opportunities for Lions Gate and Warner Bros
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lions and Warner is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Lions Gate Entertainment and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery 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 Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of Lions Gate i.e., Lions Gate and Warner Bros go up and down completely randomly.
Pair Corralation between Lions Gate and Warner Bros
Assuming the 90 days horizon Lions Gate Entertainment is expected to generate 1.08 times more return on investment than Warner Bros. However, Lions Gate is 1.08 times more volatile than Warner Bros Discovery. It trades about 0.03 of its potential returns per unit of risk. Warner Bros Discovery is currently generating about 0.01 per unit of risk. If you would invest 702.00 in Lions Gate Entertainment on August 31, 2024 and sell it today you would earn a total of 136.00 from holding Lions Gate Entertainment or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Lions Gate Entertainment vs. Warner Bros Discovery
Performance |
| Timeline |
| Lions Gate Entertainment |
| Warner Bros Discovery |
Lions Gate and Warner Bros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lions Gate and Warner Bros
The main advantage of trading using opposite Lions Gate and Warner Bros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lions Gate position performs unexpectedly, Warner Bros 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 Warner Bros will offset losses from the drop in Warner Bros' long position.| Lions Gate vs. Lions Gate Entertainment | Lions Gate vs. AMC Networks | Lions Gate vs. Altice USA | Lions Gate vs. Liberty Broadband Srs |
| Warner Bros vs. News Corp B | Warner Bros vs. Fox Corp Class | Warner Bros vs. AMC Networks | Warner Bros vs. Marcus |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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