Correlation Between Live Nation and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both Live Nation and FuelCell Energy 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 Live Nation and FuelCell Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Nation Entertainment and FuelCell Energy, you can compare the effects of market volatilities on Live Nation and FuelCell Energy 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 Live Nation with a short position of FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and FuelCell Energy.
Diversification Opportunities for Live Nation and FuelCell Energy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Live and FuelCell is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy and Live Nation 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 Live Nation Entertainment are associated (or correlated) with FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of Live Nation i.e., Live Nation and FuelCell Energy go up and down completely randomly.
Pair Corralation between Live Nation and FuelCell Energy
Assuming the 90 days trading horizon Live Nation is expected to generate 11.78 times less return on investment than FuelCell Energy. But when comparing it to its historical volatility, Live Nation Entertainment is 9.05 times less risky than FuelCell Energy. It trades about 0.21 of its potential returns per unit of risk. FuelCell Energy is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 679.00 in FuelCell Energy on September 15, 2024 and sell it today you would earn a total of 448.00 from holding FuelCell Energy or generate 65.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. FuelCell Energy
Performance |
| Timeline |
| Live Nation Entertainment |
| FuelCell Energy |
Live Nation and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and FuelCell Energy
The main advantage of trading using opposite Live Nation and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| Live Nation vs. Samsung Electronics Co | Live Nation vs. Samsung Electronics Co | Live Nation vs. Hyundai Motor | Live Nation vs. Reliance Industries Ltd |
| FuelCell Energy vs. Live Nation Entertainment | FuelCell Energy vs. Hollywood Bowl Group | FuelCell Energy vs. Nordic Semiconductor ASA | FuelCell Energy vs. Bloomsbury Publishing Plc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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