Correlation Between Capital Metals and Live Nation
Can any of the company-specific risk be diversified away by investing in both Capital Metals 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 Capital Metals and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and Live Nation Entertainment, you can compare the effects of market volatilities on Capital Metals 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 Capital Metals with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Live Nation.
Diversification Opportunities for Capital Metals and Live Nation
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and Live is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals 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 Capital Metals 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 Capital Metals 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 Capital Metals i.e., Capital Metals and Live Nation go up and down completely randomly.
Pair Corralation between Capital Metals and Live Nation
Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Live Nation. In addition to that, Capital Metals is 1.44 times more volatile than Live Nation Entertainment. It trades about -0.32 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about -0.17 per unit of volatility. If you would invest 13,587 in Live Nation Entertainment on October 10, 2024 and sell it today you would lose (568.00) from holding Live Nation Entertainment or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Capital Metals PLC vs. Live Nation Entertainment
Performance |
| Timeline |
| Capital Metals PLC |
| Live Nation Entertainment |
Capital Metals and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Live Nation
The main advantage of trading using opposite Capital Metals and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals 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.| Capital Metals vs. Givaudan SA | Capital Metals vs. Antofagasta PLC | Capital Metals vs. Ferrexpo PLC | Capital Metals vs. Atalaya Mining |
| Live Nation vs. Livermore Investments Group | Live Nation vs. Monks Investment Trust | Live Nation vs. Diversified Energy | Live Nation vs. Primorus Investments plc |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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