Correlation Between LiveOne and Warner Bros

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

By analyzing existing cross correlation between LiveOne and Warner Bros Discovery, you can compare the effects of market volatilities on LiveOne and Warner Bros 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 LiveOne with a short position of Warner Bros. Check out your portfolio center. Please also check ongoing floating volatility patterns of LiveOne and Warner Bros.

Diversification Opportunities for LiveOne and Warner Bros

-0.45

Correlation Coefficient

LiveOne  Warner Bros

Very good diversification

The 3 months correlation between LiveOne and Warner is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding LiveOne and Warner Bros Discovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Bros Discovery and LiveOne 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 LiveOne are associated (or correlated) with Warner Bros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Bros Discovery has no effect on the direction of LiveOne i.e., LiveOne and Warner Bros go up and down completely randomly.

Pair Corralation between LiveOne and Warner Bros

Considering the 90-day investment horizon LiveOne is expected to under-perform the Warner Bros. In addition to that, LiveOne is 2.45 times more volatile than Warner Bros Discovery. It trades about -0.14 of its total potential returns per unit of risk. Warner Bros Discovery is currently generating about 0.01 per unit of volatility. If you would invest  1,051  in Warner Bros Discovery on December 28, 2024 and sell it today you would lose (14.00) from holding Warner Bros Discovery or give up 1.33% of portfolio value over 90 days.

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

LiveOne  vs.  Warner Bros Discovery

LiveOne

Risk-Adjusted Performance

Very Weak

Over the last 90 days LiveOne has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Warner Bros Discovery

Risk-Adjusted Performance

Insignificant

Over the last 90 days Warner Bros Discovery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Warner Bros is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LiveOne and Warner Bros

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

The idea behind LiveOne and Warner Bros Discovery 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..