Correlation Between Spirent Communications and Live Nation
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Live Nation Entertainment, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Live Nation.
Diversification Opportunities for Spirent Communications and Live Nation
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spirent and Live is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc 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 Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Live Nation go up and down completely randomly.
Pair Corralation between Spirent Communications and Live Nation
Assuming the 90 days horizon Spirent Communications is expected to generate 10.99 times less return on investment than Live Nation. In addition to that, Spirent Communications is 2.22 times more volatile than Live Nation Entertainment. It trades about 0.0 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.07 per unit of volatility. If you would invest 6,742 in Live Nation Entertainment on October 11, 2024 and sell it today you would earn a total of 5,628 from holding Live Nation Entertainment or generate 83.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Live Nation Entertainment
Performance |
| Timeline |
| Spirent Communications |
| Live Nation Entertainment |
Spirent Communications and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Live Nation
The main advantage of trading using opposite Spirent Communications and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. INTERCONT HOTELS | Spirent Communications vs. DATA MODUL | Spirent Communications vs. Sunstone Hotel Investors | Spirent Communications vs. PPHE HOTEL GROUP |
| Live Nation vs. Direct Line Insurance | Live Nation vs. HANOVER INSURANCE | Live Nation vs. VIENNA INSURANCE GR | Live Nation vs. FAST RETAIL ADR |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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