Correlation Between Live Nation and Altria
Can any of the company-specific risk be diversified away by investing in both Live Nation and Altria 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 Altria 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 Altria Group, you can compare the effects of market volatilities on Live Nation and Altria 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 Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Altria.
Diversification Opportunities for Live Nation and Altria
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Live and Altria is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of Live Nation i.e., Live Nation and Altria go up and down completely randomly.
Pair Corralation between Live Nation and Altria
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.66 times more return on investment than Altria. However, Live Nation is 1.66 times more volatile than Altria Group. It trades about 0.1 of its potential returns per unit of risk. Altria Group is currently generating about 0.07 per unit of risk. If you would invest 6,370 in Live Nation Entertainment on October 29, 2024 and sell it today you would earn a total of 6,870 from holding Live Nation Entertainment or generate 107.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Altria Group
Performance |
| Timeline |
| Live Nation Entertainment |
| Altria Group |
Live Nation and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Altria
The main advantage of trading using opposite Live Nation and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Altria 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 Altria will offset losses from the drop in Altria's long position.| Live Nation vs. Dolby Laboratories | Live Nation vs. Lions Gate Entertainment | Live Nation vs. Superior Plus Corp | Live Nation vs. Origin Agritech |
| Altria vs. BOS BETTER ONLINE | Altria vs. Guidewire Software | Altria vs. AXWAY SOFTWARE EO | Altria vs. CODERE ONLINE LUX |
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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