Correlation Between Live Nation and Molson Coors
Can any of the company-specific risk be diversified away by investing in both Live Nation and Molson Coors 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 Molson Coors 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 Molson Coors Beverage, you can compare the effects of market volatilities on Live Nation and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Molson Coors.
Diversification Opportunities for Live Nation and Molson Coors
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Live and Molson is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of Live Nation i.e., Live Nation and Molson Coors go up and down completely randomly.
Pair Corralation between Live Nation and Molson Coors
Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 0.71 times more return on investment than Molson Coors. However, Live Nation Entertainment is 1.41 times less risky than Molson Coors. It trades about 0.16 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.09 per unit of risk. If you would invest 12,749 in Live Nation Entertainment on December 2, 2024 and sell it today you would earn a total of 1,351 from holding Live Nation Entertainment or generate 10.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Live Nation Entertainment vs. Molson Coors Beverage
Performance |
Timeline |
Live Nation Entertainment |
Molson Coors Beverage |
Live Nation and Molson Coors Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Live Nation and Molson Coors
The main advantage of trading using opposite Live Nation and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.Live Nation vs. TBC Bank Group | Live Nation vs. Jacquet Metal Service | Live Nation vs. Fulcrum Metals PLC | Live Nation vs. FinecoBank SpA |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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