Correlation Between Live Nation and United Breweries
Can any of the company-specific risk be diversified away by investing in both Live Nation and United Breweries 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 United Breweries 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 United Breweries Co, you can compare the effects of market volatilities on Live Nation and United Breweries 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 United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and United Breweries.
Diversification Opportunities for Live Nation and United Breweries
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Live and United is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries 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 United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of Live Nation i.e., Live Nation and United Breweries go up and down completely randomly.
Pair Corralation between Live Nation and United Breweries
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.3 times more return on investment than United Breweries. However, Live Nation is 1.3 times more volatile than United Breweries Co. It trades about 0.4 of its potential returns per unit of risk. United Breweries Co is currently generating about 0.06 per unit of risk. If you would invest 9,688 in Live Nation Entertainment on August 29, 2024 and sell it today you would earn a total of 3,877 from holding Live Nation Entertainment or generate 40.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Live Nation Entertainment vs. United Breweries Co
Performance |
| Timeline |
| Live Nation Entertainment |
| United Breweries |
Live Nation and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and United Breweries
The main advantage of trading using opposite Live Nation and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| Live Nation vs. Superior Plus Corp | Live Nation vs. NMI Holdings | Live Nation vs. SIVERS SEMICONDUCTORS AB | Live Nation vs. Talanx AG |
| United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc | United Breweries vs. Apple Inc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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