Correlation Between CAL MAINE and Live Nation
Can any of the company-specific risk be diversified away by investing in both CAL MAINE 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 CAL MAINE and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAL MAINE FOODS and Live Nation Entertainment, you can compare the effects of market volatilities on CAL MAINE 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 CAL MAINE with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAL MAINE and Live Nation.
Diversification Opportunities for CAL MAINE and Live Nation
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CAL and Live is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CAL MAINE FOODS 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 CAL MAINE 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 CAL MAINE FOODS 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 CAL MAINE i.e., CAL MAINE and Live Nation go up and down completely randomly.
Pair Corralation between CAL MAINE and Live Nation
Assuming the 90 days trading horizon CAL MAINE FOODS is expected to generate 2.87 times more return on investment than Live Nation. However, CAL MAINE is 2.87 times more volatile than Live Nation Entertainment. It trades about 0.24 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.47 per unit of risk. If you would invest 9,732 in CAL MAINE FOODS on November 3, 2024 and sell it today you would earn a total of 1,348 from holding CAL MAINE FOODS or generate 13.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAL MAINE FOODS vs. Live Nation Entertainment
Performance |
| Timeline |
| CAL MAINE FOODS |
| Live Nation Entertainment |
CAL MAINE and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAL MAINE and Live Nation
The main advantage of trading using opposite CAL MAINE and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAL MAINE 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.| CAL MAINE vs. Take Two Interactive Software | CAL MAINE vs. ARISTOCRAT LEISURE | CAL MAINE vs. UPDATE SOFTWARE | CAL MAINE vs. PLAYSTUDIOS A DL 0001 |
| Live Nation vs. QBE Insurance Group | Live Nation vs. Sunny Optical Technology | Live Nation vs. United Insurance Holdings | Live Nation vs. HANOVER INSURANCE |
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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