Correlation Between Barloworld and Lionsgate Studios

Can any of the company-specific risk be diversified away by investing in both Barloworld and Lionsgate Studios 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 Barloworld and Lionsgate Studios into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barloworld Ltd ADR and Lionsgate Studios Corp, you can compare the effects of market volatilities on Barloworld and Lionsgate Studios 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 Barloworld with a short position of Lionsgate Studios. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Lionsgate Studios.

Diversification Opportunities for Barloworld and Lionsgate Studios

0.47

Correlation Coefficient

Barloworld  Lionsgate Studios

Very weak diversification

The 3 months correlation between Barloworld and Lionsgate is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR and Lionsgate Studios Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lionsgate Studios Corp and Barloworld 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 Barloworld Ltd ADR are associated (or correlated) with Lionsgate Studios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lionsgate Studios Corp has no effect on the direction of Barloworld i.e., Barloworld and Lionsgate Studios go up and down completely randomly.

Pair Corralation between Barloworld and Lionsgate Studios

Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 3.05 times more return on investment than Lionsgate Studios. However, Barloworld is 3.05 times more volatile than Lionsgate Studios Corp. It trades about 0.05 of its potential returns per unit of risk. Lionsgate Studios Corp is currently generating about -0.02 per unit of risk. If you would invest  479.00  in Barloworld Ltd ADR on October 5, 2024 and sell it today you would earn a total of  182.00  from holding Barloworld Ltd ADR or generate 38.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	68.79%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Lionsgate Studios Corp

Barloworld ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Barloworld Ltd ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Barloworld showed solid returns over the last few months and may actually be approaching a breakup point.

Lionsgate Studios Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lionsgate Studios Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Lionsgate Studios displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Barloworld and Lionsgate Studios

The main advantage of trading using opposite Barloworld and Lionsgate Studios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld position performs unexpectedly, Lionsgate Studios 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 Lionsgate Studios will offset losses from the drop in Lionsgate Studios' long position.

The idea behind Barloworld Ltd ADR and Lionsgate Studios Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.