Correlation Between Live Nation and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Live Nation and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on Live Nation and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Scandinavian Tobacco.
Diversification Opportunities for Live Nation and Scandinavian Tobacco
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Live and Scandinavian is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Live Nation i.e., Live Nation and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Live Nation and Scandinavian Tobacco
Assuming the 90 days horizon Live Nation is expected to generate 2.22 times less return on investment than Scandinavian Tobacco. But when comparing it to its historical volatility, Live Nation Entertainment is 2.83 times less risky than Scandinavian Tobacco. It trades about 0.07 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 435.00 in Scandinavian Tobacco Group on September 3, 2024 and sell it today you would earn a total of 839.00 from holding Scandinavian Tobacco Group or generate 192.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Scandinavian Tobacco Group
Performance |
| Timeline |
| Live Nation Entertainment |
| Scandinavian Tobacco |
Live Nation and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Scandinavian Tobacco
The main advantage of trading using opposite Live Nation and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| Live Nation vs. Hyatt Hotels | Live Nation vs. Summit Materials | Live Nation vs. Eagle Materials | Live Nation vs. Vulcan Materials |
| Scandinavian Tobacco vs. British American Tobacco | Scandinavian Tobacco vs. JAPAN TOBACCO UNSPADR12 | Scandinavian Tobacco vs. Imperial Brands 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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