Correlation Between Reading International and Lions Gate
Can any of the company-specific risk be diversified away by investing in both Reading International 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 Reading International and Lions Gate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reading International and Lions Gate Entertainment, you can compare the effects of market volatilities on Reading International 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 Reading International with a short position of Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reading International and Lions Gate.
Diversification Opportunities for Reading International and Lions Gate
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Reading and Lions is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Reading International 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 Reading International 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 Reading International 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 Reading International i.e., Reading International and Lions Gate go up and down completely randomly.
Pair Corralation between Reading International and Lions Gate
Considering the 90-day investment horizon Reading International is expected to generate 1.38 times less return on investment than Lions Gate. In addition to that, Reading International is 1.34 times more volatile than Lions Gate Entertainment. It trades about 0.02 of its total potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.03 per unit of volatility. If you would invest 783.00 in Lions Gate Entertainment on September 1, 2024 and sell it today you would earn a total of 41.00 from holding Lions Gate Entertainment or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reading International vs. Lions Gate Entertainment
Performance |
| Timeline |
| Reading International |
| Lions Gate Entertainment |
Reading International and Lions Gate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reading International and Lions Gate
The main advantage of trading using opposite Reading International and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reading International 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.| Reading International vs. Reservoir Media | Reading International vs. Marcus | Reading International vs. Gaia Inc | Reading International vs. News Corp B |
| 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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