Correlation Between Live Nation and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Live Nation and Monster Beverage 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 Live Nation and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Live Nation Entertainment, and Monster Beverage, you can compare the effects of market volatilities on Live Nation and Monster Beverage 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 Live Nation with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Monster Beverage.
Diversification Opportunities for Live Nation and Monster Beverage
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Live and Monster is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment, and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage and Live Nation 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 Live Nation Entertainment, are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage has no effect on the direction of Live Nation i.e., Live Nation and Monster Beverage go up and down completely randomly.
Pair Corralation between Live Nation and Monster Beverage
Assuming the 90 days trading horizon Live Nation Entertainment, is expected to generate 1.16 times more return on investment than Monster Beverage. However, Live Nation is 1.16 times more volatile than Monster Beverage. It trades about 0.09 of its potential returns per unit of risk. Monster Beverage is currently generating about 0.03 per unit of risk. If you would invest 7,017 in Live Nation Entertainment, on December 11, 2024 and sell it today you would earn a total of 7,443 from holding Live Nation Entertainment, or generate 106.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment, vs. Monster Beverage
Performance |
| Timeline |
| Live Nation Entertai |
| Monster Beverage |
Live Nation and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Monster Beverage
The main advantage of trading using opposite Live Nation and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage's long position.| Live Nation vs. Metalrgica Riosulense SA | ||
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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