Correlation Between Lions Gate and Live Nation
Can any of the company-specific risk be diversified away by investing in both Lions Gate and Live Nation 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 Live Nation 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 Live Nation Entertainment, you can compare the effects of market volatilities on Lions Gate and Live Nation 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 Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lions Gate and Live Nation.
Diversification Opportunities for Lions Gate and Live Nation
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lions and Live is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lions Gate Entertainment and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation 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 Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Lions Gate i.e., Lions Gate and Live Nation go up and down completely randomly.
Pair Corralation between Lions Gate and Live Nation
Assuming the 90 days trading horizon Lions Gate is expected to generate 1.5 times less return on investment than Live Nation. In addition to that, Lions Gate is 1.74 times more volatile than Live Nation Entertainment. It trades about 0.03 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.08 per unit of volatility. If you would invest 6,619 in Live Nation Entertainment on September 12, 2024 and sell it today you would earn a total of 6,306 from holding Live Nation Entertainment or generate 95.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lions Gate Entertainment vs. Live Nation Entertainment
Performance |
| Timeline |
| Lions Gate Entertainment |
| Live Nation Entertainment |
Lions Gate and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lions Gate and Live Nation
The main advantage of trading using opposite Lions Gate and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lions Gate position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| Lions Gate vs. Live Nation Entertainment | Lions Gate vs. Toho Co | Lions Gate vs. Superior Plus Corp | Lions Gate vs. NMI Holdings |
| Live Nation vs. SLR Investment Corp | Live Nation vs. Gladstone Investment | Live Nation vs. CapitaLand Investment Limited | Live Nation vs. PPHE HOTEL GROUP |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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