Correlation Between Live Nation and Dolby Laboratories
Can any of the company-specific risk be diversified away by investing in both Live Nation and Dolby Laboratories 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 Dolby Laboratories 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 Dolby Laboratories, you can compare the effects of market volatilities on Live Nation and Dolby Laboratories 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 Dolby Laboratories. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Dolby Laboratories.
Diversification Opportunities for Live Nation and Dolby Laboratories
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Live and Dolby is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Dolby Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolby Laboratories 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 Dolby Laboratories. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolby Laboratories has no effect on the direction of Live Nation i.e., Live Nation and Dolby Laboratories go up and down completely randomly.
Pair Corralation between Live Nation and Dolby Laboratories
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.28 times more return on investment than Dolby Laboratories. However, Live Nation is 1.28 times more volatile than Dolby Laboratories. It trades about 0.07 of its potential returns per unit of risk. Dolby Laboratories is currently generating about 0.02 per unit of risk. If you would invest 7,069 in Live Nation Entertainment on September 3, 2024 and sell it today you would earn a total of 6,116 from holding Live Nation Entertainment or generate 86.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Dolby Laboratories
Performance |
| Timeline |
| Live Nation Entertainment |
| Dolby Laboratories |
Live Nation and Dolby Laboratories Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Dolby Laboratories
The main advantage of trading using opposite Live Nation and Dolby Laboratories positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Dolby Laboratories 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 Dolby Laboratories will offset losses from the drop in Dolby Laboratories' long position.| Live Nation vs. Hyatt Hotels | Live Nation vs. Summit Materials | Live Nation vs. Eagle Materials | Live Nation vs. Vulcan Materials |
| Dolby Laboratories vs. MARKET VECTR RETAIL | Dolby Laboratories vs. DATANG INTL POW | Dolby Laboratories vs. Science Applications International | Dolby Laboratories vs. PICKN PAY STORES |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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