Correlation Between Empire Metals and Live Nation
Can any of the company-specific risk be diversified away by investing in both Empire 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 Empire 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 Empire Metals Limited and Live Nation Entertainment, you can compare the effects of market volatilities on Empire 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 Empire Metals with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Live Nation.
Diversification Opportunities for Empire Metals and Live Nation
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Empire and Live is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited 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 Empire 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 Empire Metals Limited 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 Empire Metals i.e., Empire Metals and Live Nation go up and down completely randomly.
Pair Corralation between Empire Metals and Live Nation
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 3.0 times more return on investment than Live Nation. However, Empire Metals is 3.0 times more volatile than Live Nation Entertainment. It trades about 0.08 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.07 per unit of risk. If you would invest 165.00 in Empire Metals Limited on October 28, 2024 and sell it today you would earn a total of 675.00 from holding Empire Metals Limited or generate 409.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Empire Metals Limited vs. Live Nation Entertainment
Performance |
| Timeline |
| Empire Metals Limited |
| Live Nation Entertainment |
Empire Metals and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Live Nation
The main advantage of trading using opposite Empire Metals and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire 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.| Empire Metals vs. Givaudan SA | Empire Metals vs. Atalaya Mining | Empire Metals vs. Central Asia Metals | Empire Metals vs. Metals Exploration Plc |
| Live Nation vs. Vitec Software Group | Live Nation vs. Cognizant Technology Solutions | Live Nation vs. Orient Telecoms | Live Nation vs. Fevertree Drinks 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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