Correlation Between Micron Technology and Live Nation
Can any of the company-specific risk be diversified away by investing in both Micron Technology and Live Nation 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 Micron Technology and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micron Technology and Live Nation Entertainment, you can compare the effects of market volatilities on Micron Technology and Live Nation 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 Micron Technology with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Live Nation.
Diversification Opportunities for Micron Technology and Live Nation
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Micron and Live is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and Micron Technology 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 Micron Technology are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Micron Technology i.e., Micron Technology and Live Nation go up and down completely randomly.
Pair Corralation between Micron Technology and Live Nation
Assuming the 90 days trading horizon Micron Technology is expected to generate 1.06 times less return on investment than Live Nation. In addition to that, Micron Technology is 1.56 times more volatile than Live Nation Entertainment. It trades about 0.04 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.07 per unit of volatility. If you would invest 7,749 in Live Nation Entertainment on November 2, 2024 and sell it today you would earn a total of 6,685 from holding Live Nation Entertainment or generate 86.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Micron Technology vs. Live Nation Entertainment
Performance |
| Timeline |
| Micron Technology |
| Live Nation Entertainment |
Micron Technology and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Live Nation
The main advantage of trading using opposite Micron Technology and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron Technology position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| Micron Technology vs. Spotify Technology SA | Micron Technology vs. Alaska Air Group | Micron Technology vs. Scandinavian Tobacco Group | Micron Technology vs. Take Two Interactive Software |
| Live Nation vs. Endeavour Mining Corp | Live Nation vs. Silver Bullet Data | Live Nation vs. Various Eateries PLC | Live Nation vs. Darden Restaurants |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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