Correlation Between Fevertree Drinks and Live Nation
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Live Nation Entertainment, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Live Nation.
Diversification Opportunities for Fevertree Drinks and Live Nation
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fevertree and Live is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks i.e., Fevertree Drinks and Live Nation go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Live Nation
Assuming the 90 days trading horizon Fevertree Drinks Plc is expected to under-perform the Live Nation. But the stock apears to be less risky and, when comparing its historical volatility, Fevertree Drinks Plc is 1.19 times less risky than Live Nation. The stock trades about -0.18 of its potential returns per unit of risk. The Live Nation Entertainment is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 11,882 in Live Nation Entertainment on August 28, 2024 and sell it today you would earn a total of 2,105 from holding Live Nation Entertainment or generate 17.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Live Nation Entertainment
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Live Nation Entertainment |
Fevertree Drinks and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Live Nation
The main advantage of trading using opposite Fevertree Drinks and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Taylor Maritime Investments | Fevertree Drinks vs. Direct Line Insurance | Fevertree Drinks vs. Samsung Electronics Co | Fevertree Drinks vs. Lords Grp Trading |
| Live Nation vs. Samsung Electronics Co | Live Nation vs. Samsung Electronics Co | Live Nation vs. Hyundai Motor | Live Nation vs. Toyota Motor Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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