Correlation Between GEAR4MUSIC and Lions Gate

Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC 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 GEAR4MUSIC and Lions Gate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEAR4MUSIC LS 10 and Lions Gate Entertainment, you can compare the effects of market volatilities on GEAR4MUSIC 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 GEAR4MUSIC with a short position of Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and Lions Gate.

Diversification Opportunities for GEAR4MUSIC and Lions Gate

-0.22

Correlation Coefficient

GEAR4MUSIC  Lions Gate

Very good diversification

The 3 months correlation between GEAR4MUSIC and Lions is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 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 GEAR4MUSIC 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 GEAR4MUSIC LS 10 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 GEAR4MUSIC i.e., GEAR4MUSIC and Lions Gate go up and down completely randomly.

Pair Corralation between GEAR4MUSIC and Lions Gate

Assuming the 90 days horizon GEAR4MUSIC is expected to generate 1.92 times less return on investment than Lions Gate. But when comparing it to its historical volatility, GEAR4MUSIC LS 10 is 1.21 times less risky than Lions Gate. It trades about 0.09 of its potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  630.00  in Lions Gate Entertainment on September 17, 2024 and sell it today you would earn a total of  50.00  from holding Lions Gate Entertainment or generate 7.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

GEAR4MUSIC LS 10  vs.  Lions Gate Entertainment

GEAR4MUSIC LS 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEAR4MUSIC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GEAR4MUSIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Lions Gate Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lions Gate Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Lions Gate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GEAR4MUSIC and Lions Gate

The main advantage of trading using opposite GEAR4MUSIC and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC 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.

The idea behind GEAR4MUSIC LS 10 and Lions Gate Entertainment 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.