Correlation Between Warner Music and Lionheart Holdings
Can any of the company-specific risk be diversified away by investing in both Warner Music and Lionheart Holdings 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 Warner Music and Lionheart Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and Lionheart Holdings, you can compare the effects of market volatilities on Warner Music and Lionheart Holdings 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 Warner Music with a short position of Lionheart Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Lionheart Holdings.
Diversification Opportunities for Warner Music and Lionheart Holdings
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Warner and Lionheart is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Lionheart Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionheart Holdings and Warner Music 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 Warner Music Group are associated (or correlated) with Lionheart Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionheart Holdings has no effect on the direction of Warner Music i.e., Warner Music and Lionheart Holdings go up and down completely randomly.
Pair Corralation between Warner Music and Lionheart Holdings
Considering the 90-day investment horizon Warner Music is expected to generate 1.38 times less return on investment than Lionheart Holdings. In addition to that, Warner Music is 18.53 times more volatile than Lionheart Holdings. It trades about 0.01 of its total potential returns per unit of risk. Lionheart Holdings is currently generating about 0.33 per unit of volatility. If you would invest 1,002 in Lionheart Holdings on September 13, 2024 and sell it today you would earn a total of 8.00 from holding Lionheart Holdings or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Lionheart Holdings
Performance |
| Timeline |
| Warner Music Group |
| Lionheart Holdings |
Warner Music and Lionheart Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Lionheart Holdings
The main advantage of trading using opposite Warner Music and Lionheart Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Lionheart Holdings 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 Lionheart Holdings will offset losses from the drop in Lionheart Holdings' long position.| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp Class |
| Lionheart Holdings vs. Voyager Acquisition Corp | Lionheart Holdings vs. YHN Acquisition I | Lionheart Holdings vs. YHN Acquisition I | Lionheart Holdings vs. CO2 Energy Transition |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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