Correlation Between BRIT AMER and Live Nation
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and Live Nation 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 BRIT AMER and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and Live Nation Entertainment, you can compare the effects of market volatilities on BRIT AMER and Live Nation 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 BRIT AMER with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and Live Nation.
Diversification Opportunities for BRIT AMER and Live Nation
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BRIT and Live is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and BRIT AMER 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 BRIT AMER TOBACCO are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of BRIT AMER i.e., BRIT AMER and Live Nation go up and down completely randomly.
Pair Corralation between BRIT AMER and Live Nation
Assuming the 90 days trading horizon BRIT AMER is expected to generate 1.64 times less return on investment than Live Nation. But when comparing it to its historical volatility, BRIT AMER TOBACCO is 1.48 times less risky than Live Nation. It trades about 0.17 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,668 in Live Nation Entertainment on September 1, 2024 and sell it today you would earn a total of 4,517 from holding Live Nation Entertainment or generate 52.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. Live Nation Entertainment
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| Live Nation Entertainment |
BRIT AMER and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and Live Nation
The main advantage of trading using opposite BRIT AMER and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| BRIT AMER vs. Enter Air SA | BRIT AMER vs. International Consolidated Airlines | BRIT AMER vs. FORWARD AIR P | BRIT AMER vs. Norwegian Air Shuttle |
| Live Nation vs. CAREER EDUCATION | Live Nation vs. ALGOMA STEEL GROUP | Live Nation vs. Xinhua Winshare Publishing | Live Nation vs. CHINA EDUCATION GROUP |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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