Correlation Between Paramount Global and Lions Gate
Can any of the company-specific risk be diversified away by investing in both Paramount Global and Lions Gate 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 Paramount Global and Lions Gate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramount Global Class and Lions Gate Entertainment, you can compare the effects of market volatilities on Paramount Global and Lions Gate 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 Paramount Global with a short position of Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Lions Gate.
Diversification Opportunities for Paramount Global and Lions Gate
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Paramount and Lions is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class and Lions Gate Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lions Gate Entertainment and Paramount Global 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 Paramount Global Class are associated (or correlated) with Lions Gate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lions Gate Entertainment has no effect on the direction of Paramount Global i.e., Paramount Global and Lions Gate go up and down completely randomly.
Pair Corralation between Paramount Global and Lions Gate
Given the investment horizon of 90 days Paramount Global Class is expected to generate 0.91 times more return on investment than Lions Gate. However, Paramount Global Class is 1.09 times less risky than Lions Gate. It trades about 0.13 of its potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.07 per unit of risk. If you would invest 1,043 in Paramount Global Class on August 28, 2024 and sell it today you would earn a total of 69.00 from holding Paramount Global Class or generate 6.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Global Class vs. Lions Gate Entertainment
Performance |
| Timeline |
| Paramount Global Class |
| Lions Gate Entertainment |
Paramount Global and Lions Gate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Global and Lions Gate
The main advantage of trading using opposite Paramount Global and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global position performs unexpectedly, Lions Gate 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 Lions Gate will offset losses from the drop in Lions Gate's long position.| Paramount Global vs. Walt Disney | Paramount Global vs. Roku Inc | Paramount Global vs. Netflix | Paramount Global vs. AMC Entertainment Holdings |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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