Correlation Between Live Nation and Commonwealth Bank
Can any of the company-specific risk be diversified away by investing in both Live Nation and Commonwealth Bank 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 Commonwealth Bank 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 Commonwealth Bank of, you can compare the effects of market volatilities on Live Nation and Commonwealth Bank 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 Commonwealth Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Commonwealth Bank.
Diversification Opportunities for Live Nation and Commonwealth Bank
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Live and Commonwealth is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Commonwealth Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank 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 Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of Live Nation i.e., Live Nation and Commonwealth Bank go up and down completely randomly.
Pair Corralation between Live Nation and Commonwealth Bank
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.0 times more return on investment than Commonwealth Bank. However, Live Nation Entertainment is 1.0 times less risky than Commonwealth Bank. It trades about 0.02 of its potential returns per unit of risk. Commonwealth Bank of is currently generating about -0.05 per unit of risk. If you would invest 13,185 in Live Nation Entertainment on October 30, 2024 and sell it today you would earn a total of 95.00 from holding Live Nation Entertainment or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Commonwealth Bank of
Performance |
| Timeline |
| Live Nation Entertainment |
| Commonwealth Bank |
Live Nation and Commonwealth Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Commonwealth Bank
The main advantage of trading using opposite Live Nation and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Commonwealth Bank 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 Commonwealth Bank will offset losses from the drop in Commonwealth Bank's long position.| Live Nation vs. CAL MAINE FOODS | Live Nation vs. DEVRY EDUCATION GRP | Live Nation vs. EMBARK EDUCATION LTD | Live Nation vs. CHINA EDUCATION GROUP |
| Commonwealth Bank vs. JD SPORTS FASH | Commonwealth Bank vs. Gaztransport Technigaz SA | Commonwealth Bank vs. HAVERTY FURNITURE A | Commonwealth Bank vs. OFFICE DEPOT |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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